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Dubai-based Istithmar, which means "investment" in Arabic, inked a deal to buy Barneys for $825 million from Jones Apparel Group, as reported on Friday. David Jackson, Istithmar's chief executive officer, told WWD in an exclusive interview Monday that his firm's role is to help Barneys grow — and not to change it.
"We see Barneys as a differentiated retailer, with growth opportunities," Jackson explained. "We will continue to look forward with [Barneys ceo] Howard Socol and his team, helping if we can in other areas of expansion….As owners, we will not get into micromanagement. Howard and his team see opportunities [here in the U.S.], and we will work with them to define and refine that strategy…. We will not make any radical change to the company's business strategy."
While many industry consultants, and even some investment bankers not involved in the deal, have speculated that international expansion in tourist locales is the primary reason why Barneys would be an attractive purchase for an overseas buyer, Jackson downplayed that analysis.
"I wouldn't oversell that idea in the sense that we start with underlying businesses that are sustainable, with attractive growth models. To the extent that we can expand into international markets where tourists are, it would be [an opportunity], but the primary business still has to work. From our standpoint, to be attractive in tourist locales, the core business has to work as an existing business before it can [be opened] in a stand-alone tourist compound," the ceo said.
And, while most private equity firms generally aim to sell or float an asset in three to five years, don't look for Istithmar to do that with Barneys. One thing the Dubai fund has in its favor is flexibility, and it could hold on to the U.S. retailer for years.
"Whereas a lot of these other private equity funds are forced to sell or recycle the capital, if the asset is still performing, we can decide to hold on to it," said Jackson. "If the growth flattens out, or if it becomes more of a lower-growth asset, then to a certain extent we [may] look to monetize the investment."