Privalia Raises $95 Million in Venture Financing

10/04/10
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Spanish private online sales company announces record sales growth and plans to expand its leadership into new markets.

Sales in First Half of 2010 up 158%

Barcelona, October 4th, 2010 – Privalia Venta Directa, S.L., the leading private online sales club providing value for fashion brands and consumers, is pleased to announce today a €70 million ($95 million) financing. The Company also announces record sales growth for the six months ended June 30th 2010. Privalia was founded in Barcelona, Spain in 2006 by Lucas Carné and José-Manuel Villanueva and is the market leader in each country in which it currently operates: Spain, Brazil, Italy and Mexico. Privalia has over 5 million members worldwide.

Highlights:

  • New investors General Atlantic LLC (“General Atlantic” or “GA”), a leading global growth equity firm, and Index Ventures (“Index Ventures” or “Index”), together with current shareholder Highland Capital Partners, participated in Privalia’s funding round. 
  • The capital raise – one of the largest in the private online sales sector globally - will enable the Company to expand its leadership into new markets organically and through acquisitions. 
  • The new investors, General Atlantic and Index Ventures, both have extensive eCommerce experience and a long standing track record of successful investments in the sector, including Gilt Groupe (the leading US private online sales business) for GA and Lovefilm and Asos for Index. This complements the eCommerce expertise of existing investor Highland Capital Partners which is known for having backed successful European eCommerce company VistaPrint (NASDAQ: VPRT). In addition, the Company is delighted that existing shareholders including Insight Venture Partners, Nauta Capital and Caixa Capital Risc, the venture capital division of “la Caixa”, continue to hold significant equity positions, demonstrating their continued confidence in the Company. 
  • Privalia announces today results for the first half of 2010, which show sales growth of 158%; exceeding the total revenue figure in 2009. The Company now has approximately 5 million club members and employs 630 employees globally.

 

€70 million ($95 million) capital raise - use of funds
The new funding will allow Privalia to leverage its international leadership position through potential M&A activity in Europe and to consolidate its market leading position in Latin America. The funds will also enable the Company to optimise its logistic and technology network to ensure the best possible service for its growing worldwide customer base.

This capital raise is the largest funding round the Company has undertaken to date. Prior to this capital raise, Privalia had received a total of €15 million through four funding rounds since its formation in 2006. Nauta Capital and Caixa Capital Risc, both from Barcelona, were the first institutional investors in Privalia. Subsequently, Insight Venture Partners and Highland Capital Partners became shareholders through the fourth round that was used to fund expansion into Latin American markets.

Privalia was advised on the transaction by Jefferies International, the global securities and investment banking firm and Garrigues, the leading international Spanish law company.

Results for the first six months of 2010 – continuing fast pace of growth
Privalia is pleased to announce sales growth of 158% in the first half of 2010, with revenue in the period exceeding the total revenue in 2009. (Revenue figures are net of VAT and returns).

In Spain, the Group’s largest market, sales increased 88%, making Privalia the clear market leader.

Privalia’s international operations, which currently include Italy, Brazil and Mexico, grew significantly in H1 2010 and accounted for over 40% of the Group’s revenue (H1 2009: 15%). The strong international results confirm the effectiveness of the Group’s international expansion strategy.

In Italy, the Group’s second largest market, sales increased 340%. In Brazil, where Privalia now has more than one and a half million members and is the market leader, the Company increased revenues by 12 times in the first six months of the year compared with the same period in 2009.

The Board of Privalia anticipates that within two years Brazil will become the largest market for the Group. According to e-Bit, a specialist eCommerce consultancy in Brazil, the country had some 68 million Internet users at the end of 2009, 17.6 million of which had made purchases over the Internet, reflecting annual year-on-year growth of 30%.

The Group also successfully launched in Mexico in the first half of 2010. Since launch, the business has accelerated rapidly in its early phase of development and has already secured a market leading position. Privalia now employs 60 people in Mexico and results to date are 300% higher than expected.

Outlook
The second half of 2010 has started strongly with high growth performances in all of the Group’s markets. More than 40% of revenues for the year will be from its international markets, with revenue growth in Brazil expected to increase by 800% year-on-year.

The Group continues to build its membership base and provide access to some of the world’s leading fashion brands and is forecasting close to 6 million members by the end of 2010.

The Company sold more than 3.5 million products in the first half of 2010 and is aiming to deliver 50,000 products per day during its next Christmas period. Privalia was the first online private sales club to sell its products through facebook and is excited about the ongoing opportunity this channel presents.

The Board of Privalia expects full year revenues to exceed its €140 million forecast and is excited and confident about the future performance of the business as the growth strategy continues to be executed apace. (Revenue figures are net of VAT and returns).

Commenting on the fundraising, Lucas Carné, CEO and José-Manuel Villanueva, Co-Founder said:

"We are pleased that Privalia’s performance and potential have earned the support of GA and Index Ventures, leading global investors with expertise in the private online sales sector, as well as renewed commitment from our longstanding partner Highland Capital."

“Since 2006 we have been the clear private sales market leader in Spain, and over the past four years we identified an opportunity to become indisputable leaders in new markets with high growth potential. Today we have already developed market leading positions in our newer overseas markets of Italy, Mexico and Brazil. The results so far have been positive and we are confident in the future prospects in these fast growth markets.”

“The new injection of capital will be used to strengthen the existing Privalia business and to enter new markets both organically and through acquisition.”

Marcel Rafart from Nauta Capital, Chairman of Privalia said:
“The combination of a best in class management team, a proven strategy since the very early days to build leading positions in high growth markets, a well funded company and the resulting group of investors positions Privalia as one of the key European and Latin American eCommerce players.”

Fergal Mullen, General Partner of Highland Capital Partners said:
“We are honoured to be in business with José-Manuel and Lucas, two exceptional leaders and entrepreneurs, and we look forward to supporting them during the next phase of this phenomenal growth story."

Gabriel Caillaux, Managing Director of General Atlantic said:
“Privalia provides value to fashion brands and consumers, and its founders and leadership team have proven themselves to be skilled in managing geographic growth and scaling the business. We are particularly excited about Privalia’s early leadership position in the key emerging market Brazil, where General Atlantic also has an established presence. We look forward to working closely with Privalia to contribute to its continued success.”

Giuseppe Zocco, Partner at Index Ventures added:
“Private sales constitute one of the fastest growing eCommerce categories because they provide compelling value to both their members and to participating brands. We at Index Ventures have followed this space very closely over the last few years and have been very impressed with how Lucas and José-Manuel have innovated and built Privalia into a truly international leader in the sector.”

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