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Faberge Investors Earmark $450M on Growth Strategy
Colored Gemstone acquisitions to form a key part of the plan
Oct 25, 2007 11:22 AM
By Avi Krawitz
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RAPAPORT... A group of investors, led by Pallinghurst Resources, is planning to spend $450 million to restore the Faberge luxury brand, develop a new business to supply colored gemstones, and eventually partner with a leading diamond miner to create a diamond brand.
Pallinghurst has teamed up with Connecticut-based American Metals & Coal International Inc., South Africa-based bank Investec Ltd., and Texas-based private-equity fund NGP Midstream & Resources LPand, to embark on the projects.
The three partners recently paid $50 million for joint ownership of the Faberge brand, which Pallinghurst bought from Unilever in January for an undisclosed amount, through a company it set up in 2006 for that purpose, Faberge Ltd.
“Faberge was an unloved, unrecognized, and overlooked asset stuck in the Unilever business,” Sean Gilbertson, a partner at Pallinghurst Resources and a Faberge Ltd. board member told Rapaport News. “We recognized the opportunity to buy it and restore it to the revered brand it once was.”
Founded in St. Petersburg, Russia, in 1862 by Gustav Faberge, the brand gained prestige under the guidance of his son, Peter Carl Faberge, in the late 1800’s, with its range of jewelry, objects d’art, tableware and accessories and the iconic Imperial Faberge Eggs. The brand had already lost much of its prestige however, when in 1989 Unilever bought Faberge Inc --at the time a cosmetics firm-- for $1.55 billion.
“Faberge Ltd intends that the future development of Faberge will reflect the brand’s original heritage of excellence in creativity, design and craftsmanship,” the company stated upon purchasing from Unilever.
To achieve that, Faberge has appointed Mark Dunhill, former president of Alfred Dunhill Ltd., as its new CEO, to take office on November 1, and has recruited the two remaining descendants of the Faberge family – Tatiana and Sarah Faberge - to the business.
The group of investors will also focus their attention (and funds) on building a new colored gemstone business to supply rough and polished stones, such as sapphires, rubies, and emeralds.
Gilbertson said the group will build the colored gemstone business through acquisitions, the first portfolio of which will be disclosed before Christmas.
While the two businesses – Faberge and the colored gemstones operation – will operate as separate entities, Gilbertson explained that there would “definitely” be opportunity for synergy between the two, as well as a diamond business which is in making in the longer term.
The company is looking at opportunities to link the Faberge name with a leading diamond miner and has set its sights on ALROSA as a suitable match.
“Faberge is a wonderful fit for ALROSA and that would be first prize, and the most natural and logical choice,” Gilbertson said. “Imagine the power of branding ALROSA stones with Faberge?”
He noted the two companies’ common Russian heritage and the miner’s current position in the marketplace at No.2 behind De Beers. While the group had made contact with ALROSA, Gilbertson stressed that they are not in negotiations at this time.
For now, however, diamonds will pay second fiddle to the colored gemstones opportunity, and even more so to the broader luxury market as the Faberge brand rekindles its emotional appeal of yesteryear.
“I have dreamed of this moment for decades,” said Tatiana Fabergé, great-granddaughter Peter Carl Faberge. “It has been my life’s ambition to restore the unsurpassed standards of design and workmanship that characterized my great-grandfather’s treasures.”
“Now, finally, we have the basis for fulfilling this ambition. I am very pleased to be a part of one of the most significant developments in Faberge’s history,” she added.
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Tags:
Alrosa, De Beers, Jewelry, Russia, Sights, South Africa
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