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German Entrepreneur Bets on a Favorite Meghan Markle Fashion Brand

Britain's Duchess of Sussex Megan Markle, Prince Harry, Duke of Sussex, and Queen Elizabeth II during the Queen's Young Leaders Awards Ceremony on June 26, 2018, at Buckingham Palace. Britain's Duchess of Sussex Megan Markle, Prince Harry, Duke of Sussex, and Queen Elizabeth II during the Queen's Young Leaders Awards Ceremony on June 26, 2018, at Buckingham Palace.
Britain's Duchess of Sussex Megan Markle, Prince Harry, Duke of Sussex, and Queen Elizabeth II during the Queen's Young Leaders Awards Ceremony on June 26, 2018, at Buckingham Palace. John Stillwell/AFP/Getty Images

Lars Windhorst already owns one unprofitable luxury fashion brand. Now he’s getting involved in another.

The German entrepreneur’s Tennor Holding has taken a minority stake in U.K. fashion house Ralph & Russo, with an option to increase its holding up to 40% worth $50 million, according to a company statement released Wednesday. Officials for Tennor and Ralph & Russo declined to elaborate on the initial investment.

The label, a Meghan Markle favorite, lost 2.5 million pounds ($3.1 million) on 14.3 million pounds ($17.53 million) of sales in 2017, according to public filings. Tennor bought Italian lingerie chain La Perla in 2018 after that company lost 110 million euros ($124 million) on 134 million euros ($150.8 million) of sales, and last month announced a 125 million-euro ($140.68 million) deal to buy a stake in Berlin’s leading soccer club, Hertha.

Along with designing the 56,000-pound ($70,112) couture dress Markle wore for her official engagement picture, Ralph & Russo sells 20,000-pound alligator-skin handbags ($25,035) and 2,000-pound ($2,503) shoes. The company, founded in 2006 by Australians Tamara Ralph and Michael Russo, is six months late filing accounts for 2018. That’s a deliberate delay to arrange Tennor’s investment, a spokeswoman said.

Windhorst, 42, has continued to make deals even as one of his biggest investors suffered 8 billion euros ($8.99 billion) of redemptions since June 20. H2O Asset Management was questioned by analysts last month for the scale of its investments in notes tied to Tennor's companies focused on a wide-ranging assortment of businesses, from farming to advertising.

“There’s a lot of investment needed to get it to the point where it’s lucrative,” said John Caudwell, a minority shareholder of Ralph & Russo through his venture-capital firm JDC Investments. “If you took it on trading performance now, it wouldn’t be worth much, but if you valued it on strength of brand there is value.” Caudwell, who became a billionaire in 2006 after selling Phones4U, said he’s not involved with Windhorst’s investment.

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