Kering and Mayhoola Inject 100 Million Euros to Stabilize Valentino Finances

Luxury conglomerate Kering and investment fund Mayhoola have agreed to inject a significant sum of 100 million euros ($117 million) into the Italian fashion house Valentino. This crucial capital infusion aims to bolster Valentino's financial stability following a breach of its loan covenants earlier this year, as revealed by corporate documents and sources familiar with the matter. The agreement underscores the commitment of its primary shareholders to navigating current financial headwinds.

Valentino operates under the holding company MFI Luxury Srl, where Qatar-backed Mayhoola holds a controlling 70% stake, while the French luxury giant Kering owns the remaining 30%. Kering initially acquired its stake in Valentino for 1.7 billion euros in 2023, with an initial commitment to fully acquire the brand from Mayhoola. However, strategic adjustments have since been made; in September, under the leadership of new CEO Luca de Meo, Kering announced a delay in the full acquisition of Valentino until at least 2028, operating under revised terms agreed with Mayhoola.

The necessity for this capital injection arose after a consortium of banks, which had extended a 530 million euro loan to Valentino last year, requested additional funds from its investors. This demand came after the fashion house failed to adhere to specific terms of its financing agreement. The loan, signed in 2024 and set to mature in July 2029, originally featured a financial covenant based on a leverage ratio, subject to review every six months. The lending institutions involved include prominent names such as Intesa Sanpaolo, Banca Nazionale del Lavoro-BNP, Monte dei Paschi di Siena, Banco BPM, and Italy's state-backed investment fund Cassa Depositi e Prestiti (CDP).

Valentino has been contending with a challenging financial landscape marked by declining profitability and an escalation in debt, compounded by a general slowdown in global luxury goods demand. Financial filings indicate a 2% drop in Valentino's revenue at constant exchange rates in 2024, totaling 1.3 billion euros compared to the previous year. Concurrently, its core earnings (EBITDA) saw a notable 22% decrease, landing at 246 million euros. By year-end, the company's debt, which includes lease liabilities, stood at approximately 1 billion euros.

Looking ahead, both shareholders have reportedly been discussing a further equity commitment of 150 million euros, as reported by Italian daily Il Messaggero in October. The immediate 100 million euro capital infusion is structured to be delivered in two tranches, with the full amount agreed to be injected by December 10, according to minutes from a shareholder meeting held on October 16.