Written by James Bishop
Rami Cassis speaks with TheIndustry.fashion podcast about his acquisition of luxury clothing brand Hervia, his love of fashion, and his long-term approach to growth investment.
In conversation with Lauretta Roberts, Editor-in-Chief of TheIndustry.fashion, Cassis talks of his aspiration to treble the size of Hervia and use it as the foundation for a new British fashion group. He says he’ll achieve this through further acquisitions, investing in the brand’s online platform, working with talented British designers, and the move into childrenswear.
He also discusses his long-term investment strategy, why fashion is seen as unfashionable among private equity investors, and how he works with the CEOs of his portfolio companies.
Narrator: Leading a fashion business in today’s ever-changing economic background takes a multitude of skills, along with guts, instinct, and energy. In TheIndustry.fashion’s In Conversation podcast, we talk to the people who are in possession of all of those qualities and more, including those who have set up their own businesses or those who have risen to the top of fashion businesses, larger and small.
We delve into the background of these leaders’ careers, find out what drove them to success, what continues to motivate them, and what their ambitions are for the future. We also get their take on how they see the industry developing, along with their advice for those wishing to follow in their footsteps.
Rami Cassis is an international deal maker, investor, and operator. He leads Parabellum Investments, the family office he founded, which trades as a private equity firm. Cassis acquired Manchester luxury fashion retailer Hervia in May 2022 and intends to use Hervia as the foundation to form a new British fashion group.
He speaks to Lauretta Roberts, editor-in-chief of TheIndustry.fashion, about his career today as an investor, the reason why he acquired Hervia and wants to work with British designers, why he invests in businesses with a long-term strategy, and why fashion is perhaps sometimes unfashionable for private equity investors.
Lauretta Roberts: Rami Cassis, welcome to the podcast. It’s really good to see you, how are you?
Rami Cassis: It’s very nice to see you, Lauretta. I’m fine, thank you, how are you doing? It’s great to see you.
Lauretta: Hi, yeah, it’s nice to catch up with you. It’s a bit longer than that, isn’t it? I was gonna say, so your hundred-day review of your entry into the world of fashion, but it’s a bit longer now, isn’t it?
Rami: Yes, it’s about four months. Although there was August in between so it felt like time stood still during that month.
Lauretta: It did, that doesn’t count. Rami, you may not be that familiar to some of our listeners, but they’ll certainly know about the company that you acquired. So, before we get into your entry into the world of fashion, can we just talk about your career to date as an investor? Because you’ve recently bought a fashion business and I want to delve into your background before that. So can you give us the simply put history of the career of Rami Cassis, please?
Rami: Fundamentally, Lauretta, I’m a growth investor. But my background dates back to engineering and physics. I spent 10 years in the oil and gas sector. I then spent about six years in tech before doing my first deal in 2008. And so my trade today as a growth investor is to acquire mid-market firms in a number of sectors, most recently in fashion, in retail, where I support the CEOs to drive growth both organically and via acquisitions.
Lauretta: So Parabellum Investments is your fund, right?
Rami: Parabellum Investments is effectively, it is my fund, that’s correct. Whether we call it my own family office that I created or my fund it amounts to the same thing.
Lauretta: So you were originally doing this for other people, set out and decided to do it yourself.
Rami: Not quite. So I was an employee in the corporate world for the first 15 years of my career. Then with a little bit of money I’d saved after that time, I put into my first acquisition, on my own account. And I have then reinvested the proceeds from the deals that I’ve done and some of the sales that I’ve conducted into other acquisitions.
So I’ve never, to be clear, I’ve never managed funds as an investor for other people, and one of the things that I like to do is to invest own money. There are occasions where I have raised third party funding, but I’m always acting as the principal, so the person who fundamentally, ultimately, makes the decisions in terms of assets and investments. Although once we make an investment the onus is very much on the CEO and my role changes to being one of supporting the CEO
Lauretta: Got it. Interesting. I met you just after you acquired a business called Hervia, and one of the things I observed was you loved fashion. You were wearing high fashion, you were very knowledgeable about it. And I asked you then, and I’ll ask the question again now, given that you were an investor, given that you were interested in the space, it took you a while to take the plunge and invest in it. What was it then that encouraged you to finally move into fashion and had you been looking for a while?
Rami: Firstly, it’s very kind of you to comment on my fashion sense. That gives me a warm fuzzy feeling, Lauretta, so thank you. As you say, I’ve always been into fashion from the, you know, my first job was an engineer on oil rigs. And even then, I got paid reasonably well quite early in life, despite working in some very remote areas. That was where my first pay check went to, and I think, well, although my pay check has gotten slightly bigger over time, I think my interest in fashion has also continued to increase.
Anyway, so I’d made a promise to myself many, many years ago, Lauretta, that I would find a way of incorporating both my business interests, and it took me a while to work out what my business interests really are, and I very much enjoy what I do today, but I think I worked out what I wanted to do with my life when I was in my forties after I’d stopped being employed by others. And one of the promises I made to myself was that I would find a way of incorporating fashion within not only my personal life, but my professional life.
And I had been looking for a first acquisition in the world of fashion for a number of years and when Hervia came up it was finally the right fit, and it was the right fit for a number of reasons. Firstly, because I like Oscar. I like his leadership and what he stands for. I very much like the luxury brands that Hervia collaborates with. I like what he stands for. I like the focus on, and his history of, promoting and working with young British designers. These are all themes that are quite consistent with things that I want to do as a first entry into fashion. Hervia certainly wasn’t the first deal I looked at it was just the first deal that was close to my heart and where I felt there was a really good connection between my aspirations and what the company was doing.
Lauretta: So let’s talk a little bit about how, well actually, before we get to how you decide that a business, whatever it might be, in whatever field, is right for you, because I understand you have people that work on deal flow, they go and find interesting opportunities to bring them to you. I know numbers must come into it, but I know it’s not just that. What is it that makes you think, yeah, this is right for me?
Rami: A number of things, Lauretta. Firstly, I have to like the product or product that they represent. So, and in the case of fashion, they have to be products that I could see myself wearing, for example. Products that I have, even if I don’t necessarily want to wear all of them, they’re products that I have to like, and have an interest in.
The culture of the company and the leadership is fundamentally important because the last thing I would want to do is complete an acquisition and find that I need to change the CEO after a few months. So that’s a decision I make as part of the diligence of any transaction. And Oscar’s leadership and his reputation in the market, I think speaks for itself. So that is also an important consideration in terms of whether the deal gets done. And also where the company’s heading.
I’m not adverse to having to step in and help set a direction for a company. But in the case of Hervia, a lot of the initiatives that Oscar was looking at are initiatives that I happen to agree with. So the potential move into childrenswear, the British fashion support that we discussed, expansion of a number of collaborations with other designers. So where the company is heading is an important consideration. Although, just to repeat myself for a second, if it doesn’t have a clear sense of direction, I’ll make up my view quite quickly about whether or not I think it needs to change, and I’ll disclose that to the CEO so that he or she knows what they’re getting into.
Lauretta: Yes, absolutely. Now, Hervia, let’s talk about the business as it is now and what your aspirations are for it. I mean, historically it’s been, it’s got a store in Manchester, an online business, and also runs the Y-3 stores in London, doesn’t it?
Rami: That’s right.
Lauretta: So it’s got this reputation for supporting quite directional young designers. It, back in the day, was stocking McQueen and Galliano before most other people were, for example. And it’s a nice business founded by Oscar, as you’ve mentioned. You obviously liked that bit, but what were the opportunities that you saw in terms of expanding this business? And you touched on childrenswear there, what did you think you could help bring about with Hervia?
Rami: Well, firstly, my aspiration to treble the size of Hervia stands. It’s something we spoke about when we met in May, and I absolutely want to treble the size of Hervia. Both by doing follow on acquisitions, which is something we’ve been looking at, we can come on to later in the show. But also by investing in the online platform, and that means not only the website, but it also means marketing plans and social. It means expanding our footprint in terms of collaborations with other designers, namely potentially looking for British young designers with lots of potential.
Childrenswear is an area which Oscar and I discussed from the time that we were looking at how we might be able to, well, we’d like to move into childrenswear and there is some work that is beginning on that front as we speak, initially on an online portal, which I can talk about, but isn’t ready to go live yet. It’s still a work in progress, but that’s one of the things we’ve initiated.
Lauretta: Yeah, so that was one of your early priorities and you’re already somewhere down the line?
Rami: Yes, we’re kicking things off in terms of some initial investment about what an online portal would look like for childrenswear. And then lastly, I think also in terms of our physical footprint, as you say, we have a store in Manchester. But there are things in Manchester which we’re looking to review in order to help consolidate the way we run our operation. We have the Y-3 store in London, and Oscar and I are in early stage discussions about potentially considering whether we might want to open a Hervia store in London as well.
Lauretta: Should we talk about, just for a minute, and I want to talk about your ambitions in a moment, but the point about the designers, because I thought this is quite interesting when we spoke. Because there are a number of other luxury online fashion platforms in the market, some global, some very large and some a bit smaller. You had a vision of being something quite different and having a very specific relationship with the designers. Can you sort of articulate where Hervia might differ from some of the more obvious people that are in the market right now?
Rami: Yeah, so I think it comes down to two points. Working with young British designers in order to give them access to the Hervia platform, but potentially also, and importantly, extending favourable credit terms to those designers that other platforms would not, or have not, to my knowledge, been willing to extend. Because often the challenge for younger designers is working capital. They aren’t in a position to be able to sit on a lot of stock for a long time. They either need prompt or advanced payment. Effectively, they often need to be extended credit terms that are certainly more favourable than other providers would make. So it’s a combination of that as well as intimately knowing what those designers stand for and help them fulfil their potential. And, you know, someone like Wales Bonner, who’s well on her way is, probably a vivid example of that.
Lauretta: Yeah. So it’s more than just another channel for them?
Rami: It has to be more than just another channel, Lauretta, because I think in itself that’s not particularly interesting. The challenge for us is finding those designers and that’s really where I need Oscar’s input amongst other things. But being a bit more tangible than offering an online platform, like agreeing the right financial terms for those designers to help support them. So it’s not a grant, but it provides them with a more favourable working capital facility, in financial terms.
Lauretta: Yeah, exciting. And also, we talked about this as well, when you are on a platform with a number of other super brands and other designers who have a global presence, sometimes you can get a bit lost, you’re not the main focus of that.
Rami: Most definitely. So, yeah, you just won’t get any airtime. And you know, we digress slightly, but it’s one of my observations, you know, early on in the first a hundred days or so, is that all scale matters in business in general, I think it matters even more in fashion, particularly in retail, where driving the right rate of profits or returns improves substantially more with scale in retail than it does in other sectors like tech, for example, where you may be a small business but able to drive a pretty high level of profit. And by pretty high, I mean something north of ten or 15 per cent.
Lauretta: You did have a vision of potentially, there’s organic growth that you’ve got planned, potentially open stores, expanding digitally, moving into childrenswear, as you’ve mentioned. And you said I’m very open to other acquisitions to sort of create a group here. I don’t expect you to reveal details of any other things that you’ve bought or are targeting right now, but is that still a plan and what sort of businesses might you be interested in?
Rami: Yes, they either fall into the retail space where those acquisitions would be integrated within Hervia or they fall into the own brand space, which would be the second company that falls under this. And I’ve looked at a number of opportunities in retail and the kind of opportunities where we are looking for are opportunities that have the type of brands that I think are consistent with Hervia, sufficient scale to make them interesting, and probably a reasonably healthy combination of online and physical, with a preference for online. But if it’s not the latter, that’s not an issue. So in terms of the product, it is probably the most important and we want to stick to that luxury segment. I think that’s important for a number of reasons, including some of the potential economic downturns we’re going to face.
Lauretta: We touched on this a bit when we spoke last time actually. I asked you then about the sort of macro environment and said it might seem somewhat counterintuitive to some people that you observed fashion from afar and then came into it at what was then a really challenging time. And given the events the last couple of days, probably even more so. How much does that macro environment inform your decision making in general? And does it make you adapt your ideas when it comes to what you might do with Hervia?
Rami: I think the two main points of commentary on the macro environment are the supply chain disruption which will hopefully work their way through. But a consideration of course is around potentially moving the supply chain closer to home, which a lot of firms are looking at, not just in fashion. But the other one, of course, being the impending recession that we’re all getting bombarded with in the news.
In my mind, I think in more difficult economic times, the middle is the bit that tends to get squeezed, and so I think that you either need to be in the bottom end in fashion, or in the luxury end where the discretionary spending will continue. I think the middle is going to be a very hard space to operate in, in the next couple of years, for some very unfortunate and terrible reasons about the cost of living and all the things, as I said, that we’ve heard about. So my view is that the economic environment in the next year or two is going to favour being either in luxury, or in the lower end. So it does shape my decision in the context of maintaining our focus on luxury.
Lauretta: Yeah, okay. You also said to me, I think, if you sat and worried about all these external factors that you can’t control, you probably never do anything.
Rami: You’d never get out of bed.
Lauretta: Yeah, you wouldn’t, would you? So I guess you just have to go for it and stick to your guns.
Rami: We all, you know, I think the world seems to, without sounding trite, we seem to be bombarded with, you know, we’re going from one crisis to another, and it feels like it’s going to become part of everyday life. So yeah, I just think you’d never get out of bed if you were worried about the environment and waiting for calm waters because they might just never come.
Lauretta: No, I know, and I think we’ve all got through so much. You just think you can get through this, you can get through anything, can’t you really?
Rami: I mean, yeah. And I think people are resilient. I think they’re more resilient than they give them themselves credit for, and a lot of it is ultimately about economic confidence and individuals supporting themselves as well as the government playing its part. So we’re just going all to have to get better at navigating through difficult waters.
Lauretta: Even more than we already were. You’ve been an outsider looking in and now you are an insider. You’re a fashion business owner. Now that you’ve been in it, you’ve met people in it, I think you’ve into Fashion week and various things, what’s your impressions of this market? Was it what you were expecting?
Rami: My first and most overwhelming impression is that people in fashion are generally super nice. When I compare the general demeanour and mood and engagement with that of, let’s just say more established corporate sectors like banking, tech, finance, the difference is stark.
People working in the fashion industry are passionate about what they do, it’s almost a vocation for them. And even if they may, I think in comparison, be underpaid with some of their other peers in other sectors, they’re just super nice people. And I mean that across the board. And that has been the single most eye-opening thing for me since entering the world of fashion. You have people from all shapes and sizes, from all walks of life, and the other observation is that I think people aren’t in fashion by accident. You work in fashion because you’ve always wanted to work in fashion. You don’t end up there by accident. In many other sectors, once individuals have graduated, they end up falling into tech or banking or IT, and through momentum they have a 20-year career in that sector without realizing it.
It’s not the same with fashion. I think you are there because you’ve always wanted to be there. That’s probably my single most single most important observation about the people working in fashion.
They’re, they’re really cool. They’re super nice and they’re actually really, really open.
Lauretta: It’s interesting you say that. I hadn’t thought about it in those terms before actually. I mean, it is quite a vocational industry, I suppose. You know, people do it because they love it. And you’re so correct in what you say in that in other sectors, people say, oh I just got a job out of university and here I am, you know, I’m still here. Whereas fashion is something typically that people target.
Rami: Exactly. People don’t do it for the money.
Lauretta: There’s much easier ways to get money, more lucrative niches they could go in to. So nice that you say people are nice because I say that to my friends who don’t work in fashion, I say people are nice and they don’t believe me.
Rami: I think unless you’ve dealt with people in fashion, you won’t realize it. And it may sound trite to an outsider but having spent most of my previous career in the corporate environment, it’s one I know very well. The discussions I’ve had with brands and clients are just, they’re remarkably to the point, where you end up arguing about who’s going to pay the bill. I mean, it’s just not a debate I’ve ever had with anybody else.
Lauretta: What do you then see, because it’s great that you see there’s great people in it, lots of passionate people. It has got a lot of challenges and sometimes coming from the outside you can apply a lens to it that perhaps those who have just been entrenched in for too long can’t do. What do you think are the challenges and opportunities that perhaps the industry should be addressing right now?
Rami: Sustainability is probably the most topical at this point today, and how we each make our own contribution in terms of sustainability. So in our case it’s how do we reduce our physical footprint in Manchester to make our operations more efficient and seamless. So sustainability, I think is, is probably the number one consideration.
Lauretta: And do you think that the market is doing enough on that front, or do you think there’s more that could be done? It’s such a big topic actually, isn’t it?
Rami: I think it’s a big topic and I don’t think there’s a silver bullet to address sustainability. I think it’s incumbent upon each of us to do a little bit in our own way. And you know, Oscar and I have looked at how we can improve sustainability in our footprint, so to speak within Hervia. And one of the ways of doing so is what I mentioned earlier in terms of consolidating our operations in Manchester. Both in terms of the store, the office, and our warehousing facility.
One of the other challenges for the sector of course is going to be how it deals with the upcoming economic environment and the role of physical versus online. Physical stores, the in-store experience, will change, but will remain of fundamental importance, even if it is to support the online. Whereas once upon a time, it might have been the opposite. But how one offsets the focus on stores and the high street versus the rising cost of living and the recession that we’ve all talked about. So I think that’s going to be a challenge.
And then I think, for us within the UK, is how do we do a better job of supporting young British designers? I think it’s something we haven’t cracked. And spending quite a bit of time in France, a little bit in Italy, there generally seems to be a lot more support for young designers in France and Italy than in the UK, and I don’t quite know how to fix that yet. I can try and we can fix it in our own small way, but I think there may be other things that we can do, and I’m looking forward to meeting Caroline to maybe discuss her views on how I might be able to help her do some of that.
Lauretta: You talk about the BFC there? The British Fashion Council.
Rami: The British Fashion Council, yes exactly.
Lauretta: Because I think they try, don’t they? They do their best, but I think the fashion industry, I don’t know if we’ve discussed this, but I find it quite interesting. Brits don’t tend to really appreciate the fashion industry as much as say the French and the Italians do. That’s not to say that we don’t have incredibly stylish people here who love their fashion. What I mean, generally speaking, is it’s sort of seen as a bit of a frivolous, slightly daft industry, and people question its importance and relevance. Whereas if you asked a French person whether fashion as an industry, I don’t mean in terms of how you dress, but that too, if you asked whether that was important, they’d think you were insane. Of course it’s important.
Rami: Yeah, that’s very well said, I completely agree. Yeah, it seems to be more in people’s DNA in France and in Italy than in the UK. And it’s unfortunate because the UK has such tremendous depth of talent.
Lauretta: Yeah, it does. And I think in terms of also, and it’s small, but in terms of manufacturing and things, we do have some lovely manufacturers of cashmere in Scotland, for example, and Burberry trenches and Mulberry handbags, or whatever it may be. And we’ve got Savile Row, for example, which is renowned worldwide. You kind of think what other road do people instantly recognize and associate it with clothing?
Rami: I don’t think there is one. And the UK as a brand is a great brand. You know, it’s an aspirational brand for many consumers and I think we could be doing a better job of monetizing that. Clearly Burberry has been very successful in it, but I think there’s certainly scope for many other brands to espouse and promote the fact that they are UK brands.
Lauretta: You must be quite unusual as an investor, I’m thinking, because investors tend to come into businesses, and maybe I’m doing a disservice to your community, but quite often there is always a chemistry. There has to be a chemistry between an investor and a and a business because otherwise it just wouldn’t work. But quite often it is very results driven, it’s numbers driven. It’s we expect this amount of return in this period of time, and then we’re going to exit after five years and make a lot of money. That’s the sort of model. There can’t be very many that come in with your approach, I imagine. I feel Oscar seems like he’s a lucky guy right now.
Rami: That’s very sweet and very kind of you to say Lauretta. Although I call myself a growth investor when I think of my peers in the investment world, I don’t feel as though I have very much to do with them, because our approach is so fundamentally different. But my background is also so different, Lauretta. You know, I grew up as an engineer on oil and gas rigs and I’ve, I’ve spent most of my working, employed career in CEO or COO type roles. So I’ve come from industry. Investment profiles are typically bankers, lawyers, and accountants.
Lauretta: I wanted to ask you really why fashion is potentially a bit unfashionable for private equity investors. Why aren’t there more people interested in it?
Rami: Yeah, that’s an interesting observation, Lauretta. Indeed I’ve found that private equity tends to veer towards the more established, let’s call them the more established sectors like tech, banking, finance, because for a number of reasons. I think firstly, many of those private equity firms don’t really understand fashion. They’re not particularly interested in it. They’re not going to review a collection and say, well, actually that’s quite neat. It’s much easier to review what a piece of software looks like, what it does and its functionality.
I think the, the profitability in tech and in some of these other sectors is probably greater than in fashion, unless you’re at the very top end of fashion. Private equity is largely dominated by men. Largely dominated by men from the same sectors that we talked about earlier in terms of banking, so we’re talking primarily banking, finance, legal – not a demographic that is known for its interest in fashion.
So I think the focus on the financials, the lack of interest in fashion, plus the demographic, there aren’t enough women in private equity, there isn’t enough diversity in private equity. In fact, I have a private equity podcast, where I was interviewed, sorry, on a private equity podcast, where I made that specific point.
The demographics of people working in private equity tends to focus them by their own nature to the so-called established sectors. And for a combination of those reasons, I find that private equity, even in Europe, tends to focus more on IT services, tech, financial services.
Now, it’s relatively established that having your own brand drives greater profit margins than in retail. And retail is more prone to disruptions from macro factors than many other than many other industries. And I think that’s an added point that makes the equation even harder for private equity firms to really look at fashion and try and understand it and take an active interest in it.
Lauretta: Okay. So that’s interesting, comparing you to a traditional investor, but I suppose you’re gonna have something in common with these traditional investors in that you want to make money out of this, right? I mean, it’s not just about being a charitable, altruistic individual that wants to support designers.
Rami: Most definitely, Lauretta. I’m not doing this for altruistic reasons. I think fashion is a self-respecting standalone business with tremendous potential to scale and to drive substantial profits and substantial profits to be, to be blunt about it is probably north of 20%. So this is a real business venture. This is not an ego trip, it’s not a charitable venture. If along the way, I can help, we can help, some budding young designers, then that’s great. But fundamentally, we are doing this for real business reasons and it’s very much our focus.
Lauretta: Great. Well, let’s hope that this blend of caring, sharing, and making money works out for you, because I’m sure it will.
Rami: Thank you Lauretta, I’m very hopeful that it will, but thank you so much.