Desai Capital Tries On Formalwear Company –

Desai Capital Management Inc. this month acquired a majority stake in Mitchell’s Formalwear, a retailer of formalwear rentals and sales in the Southeast. Tim Kelleher, senior vice president at Desai Capital, declined to discuss terms of the deal.

Mitchell’s Chief Executive Officer Joe Doyle said, with the additional capital, he wants to see Mitchell’s become a national brand in the next five years. “This is a highly fragmented industry that is ripe for consolidation,” he said.

Doyle said Mitchell’s has been preparing a rapid growth plan for the last three years, but nine months ago retained Robinson-Humphrey Co. to assist in finding an investor to provide capital for growth. Out of 12 interested parties, the company went with Desai Capital for its experience in retail, contacts in the industry and aggressive attitude, Doyle said.

Atlanta-based Mitchell’s Formalwear has 115 stores in 64 cities and anticipated 1999 revenue of $65 million.

Desai Capital Management currently is investing its third fund, Private Equity Investors III, L.P. that closed last year on $410 million. Investors include financial institutions, pension funds, foundations and endowments as well as the firm’s partners. In 15 years, Desai Capital has invested approximately $900 million in more than 70 companies, providing capital for management buyouts and leveraged acquisitions.