Iconix Brand Group, Inc. announced that it has entered into a definitive agreement to form an equal joint venture with Novel Fashion Holdings Limited (“Novel”), a Hong Kong based company, owned and run by Silas Chou and family. The joint venture company, “Iconix China”, will be based in Hong Kong and overseen by a board of directors comprised of equal delegates from Iconix and Novel. In connection with the transaction, Novel will commit to contribute $20 million and Iconix will commit to contribute $5 million and substantially all rights to its brands for the territories of China, Hong Kong, Taiwan and Macao.
The strategy behind Iconix China will be to identify local operating companies with the potential to go public and provide them with one of the Iconix brands, and marketing and brand management support, in exchange for an equity stake in their companies. The joint venture company will also potentially acquire interests in other Chinese or Asian brands. Iconix China will also receive royalties from the existing Iconix license agreements in the territory including OP, which is licensed to Wal-Mart, London Fog, which is licensed to New Foundations and Cannon and Royal Velvet, which are licensed to Li & Fung.
Neil Cole, Chairman and CEO of Iconix commented “Silas Chou is a highly respected and successful entrepreneur in both the United States and China and will be a terrific partner for Iconix in this venture. Silas has a vision and business model for China that is as innovative for that market as the Iconix model has been in the United States. Our goal in developing Iconix China will be to become a powerful platform, not just for the brands we own today, but hopefully many new brands in the future. We believe Iconix China has the potential to deliver compelling returns to our shareholders and one day could become larger than our U.S. business.”
Silas Chou, Chairman and CEO of Novel commented, “The opportunity for these brands in China is enormous. China has a rapidly developing middle class of consumers that could number as many as seven hundred million people in the near future. China is already saturated with luxury brands, but there is a large void for brands to serve this new emerging middle class and that is the most lucrative opportunity in this exciting market. Neil and his team have assembled a world class portfolio of brands that is ideally suited to own this market in China and we will be pairing them with the best operators to realize their full potential.”