Arena International is coming under the control of a Swiss investment fund, Capvis, with a business plan that calls for a doubling in its operating profit before amortization (Ebitda) and an increase in its annual turnover of €40 million over the next four years.
Capvis, a fund that specializes in small and medium-sized companies, has agreed to take over 100 percent of the shares in Arena at an undisclosed price, reselling ten percent of the shares to Arena's management, led by its chief executive, Cristiano Portas, and by the manager of Arena's French subsidiary, Nicolas Préault. Capvis, which had total assets worth about €600 million last month, has conducted 44 acquisitions worth a total of around €5 billion since 1990, but mostly in Switzerland and Germany.
The seller, an equity fund affiliated with the big American Riverside investment group, is said to have been in a hurry to cash out, and is doing so with a nice capital gain, thanks to steady improvement in Arena's profitability since it took it over in 2010 for an enterprise value of €100 million.
According to the management, Arena probably achieved its objective of reaching Ebitda of €17 million last year, up from €14.2 million in 2012. Its consolidated revenues rose by 8 percent to about €95 million. It grew by 2 percent in Italy, the company's biggest market, after three tough years, in spite of the difficult economic situation in the country. Sales in France, the second-largest market for Arena, went up by 4 percent. The biggest contribution came from other countries where the brand has a low market penetration, led by the U.S., where it recently established its own sales subsidiary. Arena fared well with big e-tailers such as Amazon in the U.S. and Zalando in Europe.
Outlining the drivers of growth for the next four years, Portas said that Arena's annual sales in the U.S., which grew by 11 percent to around $6 million in 2013, are expected to jump by €20 million by 2018. Distributor markets, where the company's sales have been rising at a double-digit annual rate over the past few years, are expected to bring in extra revenues of €8 million by the same date, with strong growth in Russia, Brazil, the U.K., the Netherlands, Canada and Australia. E-commerce and key accounts such as Décathlon and Intersport International should both add around €6 million to the annual turnover.
Arena handles its sales directly in Italy, France, Germany and the U.K. Sales to distributors in the rest of the world except Asia, where the rights to the brand are held by Descente, amounted to €26 million last year. Luca Belogi, who has been working for Arena for seven years, has been promoted to the position of general manager, international, to lead the international expansion of the brand. In addition, Portas' right-hand man, Luca Selvatici, has been promoted to the new position of chief operating officer, supervising finance, the supply chain, legal affairs and other matters. He has been with the company for ten years.
Arena doesn't want to be involved too much in retailing, but it has nevertheless inaugurated a new mono-brand store in the Bercy district of Paris and launched the beta version of a new website in France. The store, which incorporates the company's previous Paris showroom nearby, is the fourth one in the French capital. The new website, called Arena Water Instinct, incorporates an e-commerce operation that should become global in March.
Capvis' investment in Arena has yet to be approved by anti-trust authorities to become effective. Founded by the late Horst Dassler in 1973, the swimwear brand has gone through several changes of ownership in the last 12 years. Bayerische Landesbank sold Arena to an Italian investment fund, Investitori Associati, in 2001. Another Italian fund, BS Private Equity, bought Arena in 2006 and sold it to Riverside four years later.