Milan - The latest fashion in private equity is fashion.

Bear Stearns Cos.' private-equity unit said it plans to invest as much as €200 million ($240 million) in lifestyle and luxury-goods companies here.

The announcement highlights the rising appetite of private-equity firms for luxury-goods makers as the industry's gradual recovery from a recent downturn prompts closely held fashion houses to seek money to rev up growth while venture capitalists scour the marketplace for new sectors in which to invest.

Bear Stearns' investment is part of a new partnership with the Italian private-equity fund Opera, whose assets include leather-goods label Bruno Magli and luxury-furniture maker B&B Italia. Opera's main backer is Bulgari SpA, the jeweler and high-end watchmaker based in Rome.

The deal is the first in a number of potential European partnerships for the Wall Street firm, said John Howard, head of Bear Stearns merchant-banking division. Bear Stearns teamed up with private-equity firm Texas Pacific Group in 2000 for a deal to buy Swiss shoemaker Bally, but is now looking for other European investments.

"There are so many small and middle-size companies in the lifestyle and luxury-goods market that have great brands but are either badly managed or need capital to go global," said Mr. Howard. "I would like to forge similar relationships in places like France, Germany and Spain."

This shopping spree is one risky trend. To succeed, luxury-goods companies must strike a balance between often-extravagant watch and clothing designers and finance guys and marketers, who struggle to keep the business on an even keel. And the business is hypersensitive to economic downturns, which quickly sour consumers on $500 shoes and other expensive trinkets. Even the largest luxury-goods groups -- such as LVMH Moet Hennessy Louis Vuitton SA, Cie. Financiere Richemont and Gucci Group -- have had trouble wringing profit from the small brands they snapped up during a buying binge in the late 1990s.

"There are opportunities, but private-equity funds still haven't fully proven that they are able to restructure luxury brands," says a luxury-goods analyst in Milan. "Even the ability to do so of big, multibrand groups is still uncertain."