Carlyle Group Invests in Scalina

Global alternative asset manager The Carlyle Group today announced that it has made a significant investment in Scalina, Brazil’s largest manufacturer and retailer of woman’s hosiery and lingerie. Financial terms were not disclosed.

Carlyle Director Juan Carlos Felix said, “Scalina is a well managed company with excellent growth opportunities. We are pleased to partner with company founders Ronaldo and Bruno Heilberg as we tap into the expanding demand for quality hosiery and lingerie among Brazil’s growing consumer market.”

Scalina, founded in 1963, is the largest hosiery and lingerie manufacturer in Brazil, with approximately 10% market share. Scalina produces a variety of products under two flagship brands – TriFil and Scala – including pantyhose, socks, shape ware and lingerie. Scalina has patents under review by the U.S.

Food and Drug Administration and patents already approved in Brazil for innovative products such as anti-cellulite shape wear (with bio-ceramic fabric) and anti-varicose veins socks. TriFil sells mainly through multi-brand retail stores (13,500+ throughout Brazil), while Scala sells its products through approximately 100 franchised stores as well as multi-brand stores nationwide.

Scalina Co-founder Ronaldo Heilberg said, “This is an important moment in the history of our company. Carlyle, with its strong capitalization, global network and consumer expertise will contribute significantly to our future growth as we look for consolidation and organic growth opportunities in this highly fragmented sector.”

Ronaldo Heilberg and Bruno Heilberg will become members of the Board along with Carlyle executives. Ronaldo Heilberg will serve as Chairman of the Board.
In the last five years the lingerie and hosiery sector in Brazil has grown at nearly double the rate of GDP. In 2009, as GDP contracted 0.2%, the sector grew at 3.6%. The sector is benefiting from several secular trends, including a rapidly expanding middle class (from 38% of the population in 2003 to 52% in 2009); more women participating in the Brazilian consumer market (women represent 65% of domestic consumption – 3rd largest market in the world after the U.S. and Japan); and an increase in purchasing power by more women participating in the workforce (from 31% to 45% in the past seven years) and higher average salary growth than men (42% vs. 25% CAGR in the past seven years).

Equity capital for the transaction will come from Carlyle’s South America buyout fund and “FIP Brazil de Internacionalização de empresas (FBIE)”, a local fund managed by Carlyle and advised by Banco do Brasil.

In Brazil, Carlyle is currently invested in CVC S.A. the largest tour operator in Latin America; Qualicorp, a health care company; and Scopel, a Sao Paulo-based real estate developer.

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