Falconhead Sees NYDJ Value Soar In 3 Times Exit

By Jonathan Marino

NYDJ Apparel LLC's controlling stake has been sold by private equity firm Falconhead Capital LLC to a sponsor team made up of Crestview Partners LP and Maybrook Capital Partners, the firms announced Monday, Jan. 6.

While specifics on the transaction were not disclosed, a source familiar with the deal said that Falconhead — reportedly investing $100 million in NYDJ in 2008 — returned three times invested capital on the deal. When contacted, the firm declined to comment on the sale price. 
The return also factors in the 2011 recapitalization deal Falconhead struck, through which it took a $48 million dividend when NYDJ secured an $80 million loan, according to Reuters Loan Pricing Corp.

"We know retail chains were trying to crack the code" into fashionable baby boomer jeans, said Falconhead chairman and CEO David Moross. "We saw it not as a fashion play but as a utility play," adding, "it's not a luxury brand — but it's damn close." 

With CEO Edwin Lewis, who came to NYDJ at the time of Falconhead's investment, the company grew 30% annually after the investment. The company, based in Vernon, California, was found in 2003 by Lisa Rudes-Sandel and her father, Georges Rudes; NYDJ sells jeans through department stores like Nordstroms Inc. 

Morgan Stanley was adviser to NYDJ on the transaction and Weil, Gotshal & Manges LLP was legal counsel to the company. 
Private equity firms have been striking deals in denim apparel and other fashionable brands lately, as an improvement in global markets is expected to drive ongoing consumer demand. 

In July, consumer-focused private equity firm Fireman Capital Partners sold its Hudson Clothing to Nasdaq-listed Joe's Jeans Inc., in a deal valued at nearly $100 million. Also, Sun Capital Partners LLC' European arm was among a group of investors that, after an eight-year hold, exited their stake in Lee Cooper, selling the jeans brand to Iconix Brand Group Inc. in early 2013.

That isn't to say LBO shops haven't also been making new plays and accessorizing their portfolios: U.K.-based private equity firm Permira reached a deal in October 2013 to acquire R. Griggs Group Ltd., parent of the iconic Dr. Martens boot brand. Additionally, private equity firm Leonard Green & Partners LP bought Lucky Brand Jeans in a $225 million deal, carving it out from listed fashion company Fifth & Pacific Cos. in December 2013. And The Jones Group Inc. agreed to a buyout offer from with PE firm Sycamore Partners LLC, with an enterprise value of $2.2 billion, also last month. 

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