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.