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Parcom’s $1.2bn Acquisition of Hunkemöller

By Rhys Merideth, Oliver Platts, Kian Patel, Velizar Zlatev, Saihej Ailwadhi and Nial Nolan (University of Bristol), Nancy Huang (University of Melbourne)

Photo: Fahad Waseem (Unsplash)


Overview of the deal

Acquirer: Parcom

Target: Hunkemöller

Total Transaction Size: $1.2bn

Closed date: June 2022

Target advisor: RBC Capital Markets

After acquiring Hunkemöller in 2016, the American PE firm, The Carlyle Group is selling the retail brand to the two Dutch firms, Parcom Capital and Opportunity Partners, while retaining a minority stake. Hunkemöller operates more than 900 stores in 17 different countries with projected revenue of EUR 690 million in 2022 growing from EUR 400 million back in 2016. In the past 6 years, the lingerie brand has quadrupled its omni-channel business, extended its physical footprint and invested towards digital sales through third party platforms such as About You, Zalando, ASOS.

The new investors have an existing track record in developing retail and e-commerce consumer goods brands which would support the ambition of Hunkemöller. One of Parcom’s core businesses is HEMA, a general merchandise retail chain with 11,000 employees with a strong presence in the Benelux area. The know-how from HEMA would support the expansion plans for the lingerie brand.

Company Details (Acquirer - Parcom)

Founded in 1982, headquartered in Amsterdam, Netherlands

CEO / Key Partner: Erik Westerink

Asset Under Management: €‎1.5 billion (as of 08/11/2002)

Partner Company Investments: 130+ including add-ons

One of the Netherlands’ largest private equity firms, Parcom was founded in 1982 and currently holds stakes in partner companies in more than 25 countries internationally. Parcom’s 28 employees currently actively manage a €‎1.5 billion portfolio. The 18 companies Parcom currently holds stakes in are highly diverse, ranging from materials manufacturing (Tailor Steel, TenCate) to consumer staples (HEMA, Dayes). Between October 2020 and now, Parcom Capital has acquired 7 companies operating primarily in the European region, with total revenue of around €‎300 million for platform assets.

Company Details (Target - Hunkemöller)

Hunkemöller is a company based out of the Netherlands that sells Lingerie, with over 850 stores in Europe and a growing e-commerce presence online.

Founded in 1886

Headquartered in Hilversum, Netherlands

CEO: Philip Mountford (2009 - present)

Number of employees: 7,400 (2021)

Projections and Assumptions

Short-term consequences

With a shifting focus towards sustainable investing, Parcom may face some difficulties positioning Hunkemöller amongst its competitors in the highly competitive apparel industry. Hunkemöller is advertised as an affordable brand with a significant e-commerce presence. A logical strategic implementation is to collaborate with other fast fashion e-commerce retailers such as ASOS, About You, and Zalando, hence advertising itself as a cheaper, trendy lingerie alternative.

On the upside, Hunkemöller envisions itself to transform the business into one of the largest lingerie omni-channel brands in Europe. Hunkemöller may reposition itself as a premium brand that produces quality products to increase customer’s willingness to pay, at the same time, maintain its low cost by leveraging the new joint partners’ experience in brand scaling, marketing, and investment in technology.

Long-term Upsides

Hunkemöller is a global firm specialising in lingerie; its focus will shift to a more online-centric store. Paracom has an established track record in developing retail and e-commerce consumer goods brands and is ideally suited to support Hunkemöller's strategic ambitions. The long-term aspirations of Hunkemöller will be a push to increase market share in European regions and the Americas, directly competing with already established players like Ann Summers. With the implementation of Paracom’s expertise, we believe the long-term effects for Hunkemöller will be highly technology and expansion-focused. They differentiate themselves through their customer service and brand quality, which, although very high, will be improved further in the long term.

The vision of Hunkemöller is to continue to evolve their multi-dimensional offerings further, focusing heavily on inclusivity and sustainability. The future of Hunkemöller will be heavily combined with technology, for example, the implementation of loyalty points. There is a positive long-term outlook for Hunkemöller; by growing the retail network across Europe and by investing in technology and the supply chain of the business, Hunkemöller will likely see a positive future growth.

Risks and Uncertainties

Since The Carlyle Group’s acquisition in 2016, Hunkemöller’s omni-channel suite saw a quadrupling in its size, investing heavily in technology. Revenue in 2022 is over 70% higher than in 2016. As The Carlyle Group’s 11th acquisition in the apparel/textiles sector, these results may pose unsurprising. Parcom, the acquirer of the secondary transaction, has less experience in the apparel/textiles sector but specialises in the Netherlands. Parcom only has 4 previous transactions in the sector. Although a secondary transaction, 6 years after the original purchase, Parcom’s relative inexperience in the sector may threaten late J curve gains. LP’s invested in the fund have the choice to cash out of their investment or roll into a continuation fund. Continuation funds currently have a number of separate government rules and limitations. This creates an administrative burden for LP’s, particularly if the invested LPs are dealing with similar situations in other investments. Due to the new and growing nature of GP-led secondary deals, the transition for LPs is not as seamless as it should be. This could potentially deter LPs from investing in the fund, burdening Parcom with greater equity exposure and subsequently reducing the capital for Parcom to invest elsewhere.

Moody’s have assigned Hunkmoller a B3 corporate family rating; constrained by the company's limited geographical diversification with around 80% of sales generated in Germany, Netherlands and Belgium, highlighting potential risk. A narrow product focus and the highly fragmented, competitive nature of the intimate apparel market has further constrained this rating. The prospective upside of Hunkemöller’s consistent sales growth is dampened by the company's exposure to discretionary consumer spending at a time when inflation and rising energy costs are reducing consumer purchasing power. This is exacerbated by Hunkmöller’s narrow product focus and limited geographic diversification.

“Over the past years, Philip and his team have done an exceptional job in transforming the business into a true omni-channel player and in enhancing the strength of the Hunkemöller brand.” - (Gijs Vuursteen, Managing Partner of Parcom)


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