Discount retailer swaps hands in £122m deal

The Directors of Ethel Austin have reinvested £20m for a minority stake in the discount clothing retailer, which was bought yesterday by ABN Amro Capital in a deal worth £122.5m.

The Directors of Ethel Austin have reinvested £20m for a minority stake in the discount clothing retailer, which was bought yesterday by ABN Amro Capital in a deal worth £122.5m.

The private-equity house acquired the group from Lloyds Development Capital (LDC) after two months of talks, beating off three other venture capitalists. Phil Hoskinson, Ethel Austin's chief executive, said the directors were reinvesting the bulk of their £30m windfall as a measure of their faith in the business.

Mr Hoskinson is planning to almost double the size of 270-strong estate over the next five years, expanding from 10 stores to 100 in the South-east.

"It is an exciting prospect to take the company from the back streets of Liverpool and on to the national stage," Mr Hoskinson said.

Yesterday's deal saw the Austin family sever their links with the business that was founded 70 years ago by Ethel Austin from her front room in Anfield, Liverpool. The family has finally sold its remaining 7.5 per cent stake.

The company started life as a wool seller but has since morphed into a childrenswear and womenswear specialist. The death of Ethel's son, Ronald, in 2000 prompted the family to put the group up for sale in 2002, when it was bought by a management team backed by LDC.

Ian Taylor, who runs ABN Amro Capital, said he would look for "at least another couple of years' growth" before considering a stock market listing. He added: "We will do the same as with Jessops [the camera shop chain it owns] - build up the group and take a bigger market share." Asked whether the end of the family's involvement might prompt the group to re-name itself, Mr Hoskinson said: "No, not at all. From a commercial point of view the name has very good recall. Once you hear it you don't forget it."

The deal netted £68m for LDC, which invested £11m when it bought Ethel Austin in 2002.