J Brand Sells Majority Share For $85 Million

After months of negotiations, Los Angeles premium-denim maker J Brand has sold nearly 60 percent of the company for $85 million to a private equity firm.

The deal with Star Avenue Capital of Los Angeles, announced Feb. 4, means J Brand now has more resources to grow its label beyond high-end blue jeans and expand to more international markets.

“The objective was not about the money. We are very well-financed and stable,” said Jeff Rudes, the company’s co-founder and chief executive. “It was about strategic partnerships and value added.”

Under the terms of the deal, Rudes will stay on as chief executive, and Albert Schami will remain the chief operating officer. Susan Crippen, the creative director and the other co-founder, will be leaving after receiving a $7 million payout.

“Star Avenue Capital is pleased to partner with Jeff and his talented management team to strategically support J Brand’s business and to bring it to the next level in the premium-denim category,” said Star Avenue Capital Managing Director Mark Genender in a statement.

This is the first deal for Star Avenue, which was created in 2009 as a consumer growth equity vehicle in partnership with private equity firm Irving Place Capital and entertainment agency Creative Artists Agency. “We have direct access to CAA’s extensive resources and expertise across multiple functional areas, including marketing, branding, lifestyle and consumer research as well as access to Irving Place Capital and its relevant investment experience with consumer and retail companies,” Genender added.

Peter Boneparth, a senior adviser to Irving Place Capital and the former chief executive of Jones Apparel Group, will become chairman of J Brand.

This is the second investment in one week in a Los Angeles apparel venture. Los Angeles designer Robert Rodriguez announced on Feb. 4 that he sold his company to Jones Apparel Group for $28 million (click here).

The J Brand deal is very similar to one The Sage Group helped negotiate a few years ago for Not Your Daughter’s Jeans, owned by George Rudes and his children. George Rudes is Jeff Rudes’ uncle and owns a small percentage of J Brand.

In September 2008, George Rudes sold a majority share of his blue-jeans company to Falconhead Capital LLC for $100 million.

J Brand was founded in 2005 by Rudes and Crippen and soon became popular among celebrities and fashionistas such as Hilary Swank, Cameron Diaz, Rihanna and Gwen Stefani. J Brand, whose jeans retail for around $158 to $224, was one of the first companies to make the skinny-leg jean now seen everywhere. J Brand’s line, first carried by Ron Herman in Los Angeles, is now sold at high-end stores such as Barneys New York, Bergdorf Goodman, Neiman Marcus, Nordstrom and Bloomingdale’s, Rudes said. The label is also popular in Europe, where it sells at Harvey Nichols and Selfridges in London, Le Bon Marcheacute; in Paris and Biffi in Milan.

Rudes said he approached The Sage Group, a private investment-banking firm in Los Angeles, a year ago to find an investor to help expand the company, which has been on a solid growth pattern.

Rudes said the company’s sales increased 30 percent last year to $50 million and is on target to grow another 30 percent this year with the company sticking with its premium denim line for the immediate future. “We will remain focused on what we do best right now,” Rudes said. But in a few years, he sees major expansion into other areas.

Rudes will be with the company for a long time. “I hold a very strong amount of stock personally, and I am not planning on going anywhere, just as Ralph Lauren has stayed with his company,” he said. “I am passionate about this brand. The J in J Brand is me.”