The deal gives New Look a reported value of £1.9bn and sees existing backers Apax Partners and Permira exit following an 11-year involvement in the company.
Brait has cited New Look’s double-digit EBITDA growth in recent years, “solid” cash flow generation, “established” UK footprint and “strong growth prospects” in France, Germany, Poland and China as reasons for its purchase of 90 per cent of the business.
According to a statement, New Look as net financial debt of around £1bn, a figure that Brait and the management team are “comfortable” with given its cash flow generation. Going forward, plans will be put in place to review financing alternatives.
Anders Kristiansen, CEO of New Look, said: “Brait have a track record of long-term and supportive investments – they give us the perfect platform to continue our strategy of growth the New Look brand in the UK, Europe and China.”
New Look was founded in 1969 by Tom Singh and now has in excess of 800 stores in 21 countries, with 19 of those in China and 569 in the UK. A take-private deal in 2004 saw Apax Partners and Primera enter as equity backers.
It had been considering an IPO during 2014 and the early part of 2015, but held back so it could build up a “solid business” in China, Rusia, Poland and Germany. “Once we have credible traction in the international market, that’s when we start the debate on whether to IPO or not,” said Kristiansen at the time.
John Gnodde, CEO of Brait, commented: “New Look is an attractive investment opportunity for Brait – it is a market leading brand, with a strong track record of double-digit EBITDA growth, solid Cashflow conversion, international reach, and the potential to grow rapidly in a number of geographic markets including China. We have been highly impressed with the management team and look forward to partnering with them.”
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In separate news, US private equity firm TPG has purchased a majority stake in discount retailer Poundworld. The deal, valuing the company at around £150m, sees Poundworld’s founding family bank more than £75m. The business was set up by Chris Edwards as a market stall in 1974, with a maiden high street destination opened in 2004. Edwards and his son Christopher will remain “substantial” minority shareholders.
“After 40 years of building this great company, I am very excited to have a partner like TPG to support Poundworld’s next phase of growth. They bring with them an extensive and global body of experience in retailing, which will help us to create the infrastructure and develop new capabilities to reach our very ambitious goals,” said Edwards Sr. “I began this business as a market trader and we now have millions of customers from all corners of the nation and all walks of life. Still, there is so much more for us to achieve.”
The acquisition follows the purchase, subject to competition clearance, of 99p stores by London Stock Exchange-listed Poundland for £55m.
Finance from TPG will be used to fund an accelerated store expansion programme thought the UK, new distribution facilities, and “advanced” data analytics. The company also sees a “significant opportunity” to grow the business and its product offering to meet the “increasing demand” for value variety retailers – which it believes are now recognised as part of the “mainstream retail landscape”.
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