Sycamore Turns Heads With Its Retail Shopping Spree
A private equity deal maker is turning heads in the fashion world.
Stefan Kaluzny, who started the buyout firm Sycamore Partners just two years ago, has made a couple of splashy purchases straight out of the gate.
On Thursday, Sycamore announced an acquisition of the teenage retailer Hot Topic for about $ 600 million. The 800-store chain, which sells edgy, dark music-themed clothing, is the firm’s largest acquisition to date.
The Hot Topic purchase followed last summer’s acquisition of Talbots, the struggling women’s wear chain, for about $ 400 million. And in between those two deals, last December, Sycamore made a roughly $ 555 million bid for Billabong, the Australian surfer wear company.
Focusing primarily on retail and consumer investments, Sycamore hung up its shingle in 2011. But the Mr. Kaluzny and his Sycamore co-founder, Peter Morrow, are no retail-industry parvenus. They came from Golden Gate Capital, a low-profile San Francisco-based private equity firm with a number of retail holdings. While at Golden Gate, Mr. Kaluzny played a leading role in a number of retail deals, including the clothing chain Express and the jeweler Zale.
Sycamore raised a first fund in excess of $ 1 billion, an impressive sum for a fledgling firm in a challenging fund-raising environment. Sycamore struck its first deal when it acquired a 51 percent stake in Mast Global Fashions, a division of Limited Brands that sources apparel from overseas manufacturers.
Underscoring its grand ambitions, the firm took space on the 31st floor of 9 West 57th St., one New York’s fanciest office towers with commanding views of Central Park. The building has become something of a gilded village housing many of the world’s largest private equity funds. Among Sycamore’s neighbors at 9 West 57th are Apollo Global Management, Kohlberg Kravis Roberts & Company and Silver Lake Partners.
Lawyers and bankers say that they are not surprised that Mr. Kaluzny is already making a mark. One banker said that when he makes up his mind about a deal, he can be “a bold and aggressive” investor. And from the looks of it, some of Mr. Kaluzny’s fashion choices appear to be bold and aggressive, too.