Episode Summary
Executive Summary: Partners Group’s Andreas Holzmüller and Luke Chapman explain how a long thematic effort led them to Breitling, a historic Swiss watch brand repositioned for a younger, more casual luxury consumer. They discuss the minority-to-control investment path, brand transformation, watch industry economics, smartwatch concerns, and the growth levers ahead: brand, U.S. penetration, gender balance, and digital/e-commerce.
Main Topics: Partners Group’s thematic investing model (Priority: 5/5): Andreas outlines how Partners Group finds deals through long-term thematic research and then governs companies entrepreneurially to create strategic, durable value. Breitling’s heritage and brand positioning (Priority: 5/5): Luke describes Breitling’s history as a Swiss watchmaker rooted in aviation utility, now evolving into a broader luxury brand with strong heritage and design appeal. Neo-luxury consumer thesis (Priority: 5/5): Partners’ investment thesis centered on a younger, more casual, digitally engaged luxury consumer whose values and habits differ from traditional luxury buyers. Deal sourcing, diligence, and valuation conviction (Priority: 4/5): The team explains how years of theme work, deep consumer/channel diligence, and conviction in the brand’s post-COVID rebound helped them win the minority deal and later control. Brand transformation and growth levers (Priority: 5/5): The conversation details how Breitling changed its logo, stores, imagery, and storytelling, and how the next phase focuses on U.S. growth, gender balance, and digital commerce. Industry risks, economics, and capital structure (Priority: 4/5): They discuss smartwatch disruption, luxury margin structure, cyclicality, and why Breitling’s leverage remains conservative to preserve flexibility for growth.
Key Arguments: Partners Group believes superior private equity outcomes come from thematic research and entrepreneurial governance, not short-term market inefficiencies. Breitling fits the neo-luxury theme because it appeals to affluent consumers seeking casual, value-driven luxury rather than traditional status signaling. A long diligence process created differentiated conviction and helped Partners outbid more opportunistic investors during a noisy post-COVID period. Breitling’s brand reset—dropping the wings logo, redesigning boutiques, and changing imagery—was necessary to broaden appeal beyond aviation enthusiasts. The smartwatch threat is real at the category level, but luxury watches in Breitling’s price range are often complementary to smartwatches rather than substitutes. Breitling’s economics support the model: pricing power, strong brand desirability, and a relatively flexible cost base with marketing and retail partnerships. The company’s growth plan is multi-pronged: expand U.S. penetration, improve gender mix, deepen digital/e-commerce, and keep investing in storytelling. Conservative leverage is intentional so the business can invest through uncertainty and maintain operational flexibility rather than optimize for short-term financial engineering.
Data Points: Assets under management: $130 billion - Partners Group’s total AUM across private markets Private equity AUM: $70 billion - Rough amount of Partners Group assets in private equity Founded: 1996 - Partners Group’s founding year in Switzerland Breitling founding year: 1884 - Breitling’s original founding as a Swiss watchmaker Watch price point: $5,000 to $10,000 average - Luke’s description of Breitling’s core luxury pricing Ownership history: 4 owners - Breitling’s ownership changes over its long history Minority investment: 2021 - Partners Group first invested in Breitling as a minority owner Control investment: Just before Christmas (following the minority deal) - Partners later acquired a controlling stake Smartwatch units sold: 80 million - Referenced as today’s smartwatch market size Swiss watch industry units sold: 16 million - Used to compare smartwatch scale with traditional watch volumes EBITDA margins in luxury: 20% to 30% - Typical margin range discussed for luxury goods Store count: 200 stores globally - Breitling’s retail footprint Leverage: around 4x - Partners’ preferred leverage level for the business U.S. watch spending comparison: U.S. consumer spends 20% of U.K. consumer - Illustrates underpenetration of the U.S. watch market Population comparison: U.S. has 5x the population of the U.K. - Supports the case for U.S. market expansion Severe recession decline: 5% to 6% - Estimated watch consumption decline in a difficult macro year Ownership duration target: 5 to 8 years - Typical private equity hold period mentioned by Andreas
Pivotal Quotes: "We really want to create long-term strategic change, build better businesses, and act as long-term owners with an industrial mindset." — Andreas Holzmüller: On Partners Group’s investment philosophy "Brand building and brand communication is not a three, four-year exercise in an industry which has 150-year-old brands and this being one of them." — Luke Chapman: On the time required to transform Breitling’s brand perception "In this industry, people don't buy a watch four times a year. They're buying an occasional purchase, an anniversary, a birthday, a special occasion." — Luke Chapman: On the category’s purchase behavior and long runway for growth
Implications: The episode shows how private equity can create value through patient thematic investing, brand reinvention, and operational support. For luxury investors, the key opportunities are digital reach, demographic broadening, and disciplined growth without overleveraging.
About Private Equity Deals
Allocator and asset management expert, Ted Seides, conducts in-depth interviews with interviews with top institutional money managers across private markets. Guests include principals and senior leaders from private equity, private credit, real assets, and other alternatives. We dive deep into individual deals to learn about deal dynamics, companies, and ownership that make private equity a force in institutional portfolios and the global economy. Learn more and join our community at capitalallocators.com.