In 2012, Permira, which acquired Hugo Boss and Valentino as part of a 5.3 billion-euro deal, sold the Valentino unit for €710 million, having effectively written down its investment in the Italian luxury house by more than half by the end of 2009. That sale allowed Permira to pay down the debt on Hugo Boss as it reduced its holdings in the German brand, leading to a sale of its remaining stake in 2015. It made 2.3 times its investment.

“High fashion in particular was where private equity found its greatest challenges, which was no wonder given global retail economics, and that creative success can be a hit-and-miss business,” Mr. Solca said. “In particular, many firms failed to recognize the importance of scale. All is easy when you are big. Those who focused on growing small brands in order to create new value for shareholders, however, found it could be very difficult and expensive.”

But with few luxury opportunities left and millennials, price wars and the rise of e-commerce driving big changes in the retail and consumer market, private equity now appears to be trying its luck once again with contemporary fashion.

A 2018 survey by Deloitte showed that, as firms embrace these midsize businesses, average deal values in the fashion and luxury sector have significantly decreased in recent years while still presenting an increase in returns on investments . Nearly 90 percent of private equity funds had considered an investment in a fashion and luxury asset as part of their 2018 investment strategy, the report said.

So what sort of companies have become top targets? Consider the likes of the streetwear label Supreme, in which Carlyle made an investment in 2017, and the fashion e-commerce retailer Matchesfashion.com, in which Apax Partners acquired a majority. Contemporary fashion brands with strong omnichannel sales and social media presence like Ganni, Isabel Marant, SMCP and the Kooples have been subject to a recent string of private equity stake building or buyouts.