Brand Prestige as Holding Company Currency

“rnault saw potential in Christian Dior, a more attractive company within his group. He believed that he could better convince investors by showcasing the store on Avenue Montaigne. However, there was a problem: Dior was indeed a magical, universally known name, but it was a small business with only 600 million in revenue and 50 million in profits. It was valued at 1 billion at most, which was far from the 7 billion needed. Undeterred, Arnault decided to inflate Dior's value with Jacques Rober's stake in LVMH. As a result, the fashion house became a holding company valued at over 8 billion. For the first time, the prestige of a brand, transformed into a holding company, was used to attract investors.”

“Arnault proceeded with a capital increase of 7.3 billion for Dior to finance the contribution of LVMH shares. Of this amount, 4 billion were injected by Boussac Saint-Frères, which controlled Dior 100%, 2 billion came immediately from the sale of Peaudouce, and the remaining 2 billion were to be obtained through a later operation that Arnault was not yet willing to reveal. Regardless, the Arnault group ensured that it retained 58% of Dior. This allowed them to raise 3.3 billion on the market, offering 42% of Dior's capital, particularly to French and foreign institutional investors. Bernard Arnault thus completed his financing without losing control of his fashion house, which itself owned the LVMH shares.”