Lloyds' buyout arm bags Mountain Warehouse stake

The private equity arm of Lloyds, the state-backed bank, has bought a significant stake in the fast-growing outdoor retailer Mountain Warehouse.

Lloyds Development Capital has purchased about a 20 per cent shareholding in Mountain Warehouse to accelerate its growth from 110 stores to more than 200 by 2014.

The private equity firm has bought the minority stake from Arev, the troubled Icelandic investment vehicle. It is understood that Mark Neale, the managing director who founded the retailer in 1997, will maintain his majority shareholding in the business.

For the year to 28 February, Mountain Warehouse delivered pre-tax profits up by 38 per cent to £7.67m, according to its latest accounts posted at Companies House. Sales rocketed by 51 per cent to £46.75m over the period, helped by new stores.

Mountain Warehouse continues to open stores rapidly and its like-for-like sales are thought to be in positive territory since the end of February. The retailer declined to comment and LDC did not return calls.

The exit of Arev from Mountain Warehouse is the latest retreat by Icelandic investors from the UK high street. It follows the calamitous collapse of Baugur, the group that previously owned stakes in House of Fraser, Hamleys and the company behind Karen Millen and Oasis.

The Anglophile Icelandic founders of Arev, which had a sister private equity firm Kcaj, named the both companies after Coronation Street characters. Kcaj and Arev spelt backwards are Jack and Vera, the former iconic couple in the long-running North-west TV soap.

The two firms previously had stakes in Ghost, the womenswear specialist, Hardy Amies, the former dressmaker to the Queen, and Blooming Marvellous, the maternitywear chain. All three retailers collapsed before being bought out of administration. Arev and Kcaj have also exited their investment in Jones Bootmaker.