Simon Sells Off Authentic Brands Group Stake, Will Put up No Capital for Express
The biggest mall owner in the U.S., Simon Property Group, is making some shifts in its “side hustle” as a brand owner. On an earnings call discussing its Q1 2024 results, CEO David Simon shared that the company had sold its remaining stake in brand management firm Authentic Brands Group for $1.2 billion.
The companies remain partners through their joint venture SPARC Group — through which they buy and rehabilitate struggling retail brands like Lucky Brand, Brooks Brothers, Forever 21 and Eddie Bauer — but Simon had reduced its stake in that business, from 50% to 33%, last October.
Express Deal with WHP will Require no Capital from Simon
Simon also revealed on the call that a similar venture with brand management firm WHP Global, to buy Express out of bankruptcy, would require no capital on the part of Simon Property Group if it goes forward.
“We were approached by the IP owner,” Simon said on the call. “They saw what we had done historically both with [Authentic] and SPARC and offered us to participate with no capital, but also add our expertise and our knowledge. We have always valued Express as a retailer and as a client, so we jumped at the opportunity. It’s got to go through that bankruptcy process, and that’s out of our control, but if WHP does end up getting it, we’d be pleased to participate in the turnaround of Express. Express is a good company and a great brand and we can add value to it. Given the fact that we’re able to hopefully turn around the retailer, save jobs, create value from our investment, we see it as a win-win situation with no capital from our standpoint.”
Simon-Authentic Partnership Still has a SPARC
Simon presented the selloff of its investment in Authentic as a good thing for the business. The company reduced its share in Authentic from 12% to just under 10% in Q4 2023; that sale, combined with the more recent selloff of its remaining stake, have netted the company total gross proceeds of $1.45 billion. “We generated substantial value from the ABG investment and a 7X multiple on our net invested capital during our short ownership period,” said Simon on the call with analysts.
Among the companies that bought Simon’s shares in Authentic Brands were Leonard Green & Partners, General Atlantic, HPS Partners, Jasper Ridge Partners and Singapore’s sovereign wealth fund Temasek Holdings, according to WWD.
Authentic, which was founded by current Chairman and CEO Jamie Salter in 2010, generates the bulk of its revenue from licensing its roster of more than 30 brands. In addition to distressed retail brands like Barney’s New York, Juicy Couture and Nine West, the ABG portfolio also includes the IP of celebrities such as Marilyn Monroe, Muhammad Ali, Shaquille O’Neill and even the Sports Illustrated media brand. Authentic had planned to IPO in 2021, but eventually decided instead to sell stakes in its business to a number of investment firms, with Salter saying at the time, “I’d rather be private.”
Through its SPARC Group joint venture with Simon, Authentic also has acquired companies including Lucky Brand, Nautica, Brooks Brothers, Forever 21 and Eddie Bauer. In August 2023, Chinese shopping platform Shein acquired an approximately one-third interest in SPARC Group and SPARC becoming a minority shareholder in Shein.
