The South African billionaire Christo Wiese has snapped up the fashion chain New Look for £1.9bn, netting its former private-equity owners Apax and Permira £780m and allowing them to walk away from £1.1bn of debts.
Mr Wiese bought the high street chain, through his investment vehicle Brait, after years of searching for a major British brand to stamp his mark on. Talks to take over BHS collapsed last year.
He also bought the Virgin Active gym chain last month and is an investor in a new fashion retailer, Pep & Co, which will open 50 high street stores this summer, through a separate vehicle.
New Look’s chief executive, Anders Kristiansen, and its finance director, Mike Iddon, will stay on to drive through plans for overseas expansion, with particular focus on China, where the company already has 27 stores and plans to open 60 more this year.
The Chinese expansion has already yielded results, with Mr Kristiansen revealing that the business is turning a profit after just a year. His own experience as deputy chief executive of the 5,500-store Bestseller group was said to be a key part of Mr Wiese’s decision to launch a bid.
The management team will hold a stake in the new business, along with New Look’s founder Tom Singh, who will retain a 10 per cent stake.
Mr Kristiansen said: “We had looked at a number of options to sell the business and we really got on with the guys from Brait.
“They completely bought into our strategy and we decided this was the best for the company. I think it’s a good deal for everybody. They are long-term investors, not private equity. It’s about investing in the future.”
Apax and Permira bought the business in 2004 but failed to turn it around and it suffered badly during the recession. They had to issue high-interest PIK bonds to refinance the company and had been trying to offload it either through a direct sale or a stock market listing. The sale price means they have quadrupled their initial investment in New Look.
Advisers had been appointed for a flotation, and a sale to the private equity firm Clayton Dubilier & Rice, advised by Sir Terry Leahy, had also been mooted.
Mr Iddon said the new owners had been working with the company for the past three months. He added: “They are letting us get on with the job. They are happy with the strategy, and the question we’ve got is, ‘If we give you more cash, how can you go faster?’”
New Look plans to overhaul its UK stores, having updated and upgraded about half of its 569 sites.
Full-year sales rose 3 per cent last year to £1.5bn, with like-for-like sales up 2.7 per cent. However, it swung to a pre-tax loss of £55m following a £64.2m writedown on its struggling French business, Mim, which it subsequently sold in September.
More recently, the company suffered from the unseasonably warm weather last autumn, which hit the entire high street.Reuse content