Beverly
Hills based family office Grand Metropolitan has specialized in
acquiring distressed debt luxury goods brands for more than three
decades. The Group’s portfolio started as an investment in a fine
jeweler in suburban Michigan growing to one of the largest
privately-held luxury conglomerates in North America. The firm was
founded in 1987-1988 at the same time as Bernard Arnault’s LVMH, Johann
Rupert’s Richemont, and François Pinault’s Kering.
Mr.
Vin Lee, managing director and CEO, earned patents for mechanical
billboards created for H. Wayne Huizenga’s Blockbuster Video that have
participated in becoming a $6 billion industry worldwide with
installations including the Walt Disney Company, Sumner Redstone’s
Viacom, and the Durwood family’s AMC Theatres. Today, Grand
Metropolitan manages a portfolio of 100 luxury brands, estimated $7
billion AUM.
A
brief formal education in fine art, Vin Lee abandoned ambition of
becoming an artist, instead began building prototypes for his
to-be-awarded patents while he studied Business and Finance at the
University of Michigan. Lee was also consulting in the trucking and
rail industry redesigning shipping lines and storage facilities at Ford
Motor Assembly Plants. Thanks to his fathers connections. This led to a contract with Detroit’s General Retirement System
to turn around the $82 million misfortunes of bankrupt Grand Traverse
Resort, a luxury hotel with world class golf amenities designed by Jack
Nicholas.
With proceeds from the resort contract, Vin Lee invested in DuQuet Jewelers considered the largest importer of Bernd Muensteiner dubbed the Picasso of laser cut gemstones. Shortly thereafter, a DuQuet
vendor collapsed enabling Mr. Lee to privately purchase $18 million in
retail gemstones for pennies on the dollar. The company began bidding
on bankrupt jewelers Town & Country, Aurafin, OroAmerica, often
losing out to Warren Buffett’s Berkshire Hathaway’s Richline.
Vin
Lee attempted resuscitating bankrupt Winkleman’s, one of the region’s
most notable women’s retailers with support from their family board
members. He planned to merge with struggling Crowley, Gantos and
Jacobson’s into one large Department Store Group. Afterward, Lee
relocated to warmer climate liquidating his modest Midwest retail
positions. During this period, retail giants Montgomery Ward,
Heilig-Meyers, and Service Merchandise also fell into bankruptcy. The
firm directing the administration a close friend with familial ties to
the California Public Employees’ Retirement System (CalPERS).
Before
Eddie Lampert did with Sears Roebuck and Kmart Holdings, $7 billion
Montgomery Wards (Owned by GE Capital) was a treasure chest for Vin Lee
generating hundreds of millions in jewelry sales. Only 10 years earlier, Wards was taken private in a $3.8 billion LBO.
Out of $4 billion in revenue, Service Merchandise earned $1 billion in
jewelry sales. Unfortunately, creditors swallowed too much loss. Those
brands were far too damaged. GE Capital and suppliers couldn’t get
along. Too many people had been hurt to successfully resurrect either.
Researching
the assets of these American icons, Vin Lee discovered Heilig-Meyers,
the largest publicly-held furniture company in the world, was also one
of the leading jewelers in North America with $300-400 million in annual
jewelry sales to their balance sheet. In addition, Heilig-Meyers had a
strong positive social image owning a NASCAR team and raising millions
of dollars for Cystic Fibrosis.
During
Lee’s time working with Blockbuster Video, chairman/CEO Huizenga
perfected the industry rollup. The formula consisted of acquiring
multiple competitors consolidating them under one brand, ultimately
tipping the scales of power with your distributors, vendors, and
suppliers. This fascinated Lee and would become the cornerstone of
Grand Metropolitan’s portfolio growth strategy.
Grand
Metropolitan pursued acquisitions in home furnishings and jewelry
industries with the task of creating the largest American luxury goods
conglomerate. Samuels Jewelers, 200-location chain ranked 5th in the
country was first in Lee’s planned jewelry industry rollup. Ultimately,
the $75 million price tag (including debt) was too leveraged for Grand
Metropolitan. Samuels went bankrupt after Lee walked away.
Following
in the footsteps of fellow Michigan billionaire Tom Gores, Vin Lee
would set up shop in Beverly Hills to focus on luxury goods, acquiring
Diamonds on Rodeo, Gallery Rodeo, Beverly Hills Sports Car, and Beverly
Hills Cigar Club. During this period, Grand Metropolitan continued
rebuilding Heilig-Meyers and introducing Pushkin Caviar to North America.
Grand
Metropolitan became interested in Finlay Enterprises, leading retailer
of fine jewelry and operator of leased fine jewelry in department stores
in the world boasting $1 billion in annual revenue from 1,000
locations. The company had a $300 million valuation. Finlay management
borrowed $500 million from GE Capital using $200 million to acquire 200
locations from Zale Corporation under 5 banners leaving the company
crippled with debt and turning Lee off.
It
would take 8 years of patience before Grand Metropolitan was able to
acquire the Finlay brand out of bankruptcy crowning 30 national,
regional, and local jewelers now including Samuels Diamonds. Today, the Group continues a strong advocate for Breast Cancer Awareness and Cystic Fibrosis. While still in his 40s, Vin Lee is excited to lead Grand Metropolitan toward international expansion, delighted to follow his French and South African contemporaries.