Soros makes a loss in Safestore's £40m management buyout

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The Independent Online

Billionaire investor George Soros recorded aloss on one of his UK investments yesterday when the Safestore chain of self-storage warehouses was sold to a management buyout team for £40m.

The Soros Real Estate Investors' fund paid £14m for a 25 per cent stake in April 2000 when the shares were trading at 62p. Yesterday the storage company agreed a deal at just 44p per share, valuing the Soros stake at £10m.

Other investors who lost money include Nigel Wray and Nick Leslau, the property developers behind the Prestbury real estate company. Prestbury bought an 8.2 per cent stake at 47p per share in November 1999.

It is understood that it was Mr Soros's desire to dispose of his holding that triggered the sale of Safestore to a management team backed by venture capital company Bridgepoint.

The Safestore stake was the only quoted company investment held by Soros Real Estate Investors and the fund wanted to sell up.

It appointed Investec to find a buyer. US firm Extra Space was granted exclusive negotiating rights between January and May and put in a bid of 50.5p per share. However, the independent directors of Safestore became frustrated at the protracted negotiations and accepted the lower offer from Bridgepoint. The take-out price is a 19 per cent premium to the previous day's closing price.

One of the few major investors to make a turn on the deal is Giles Clarke, the serial entrepreneur behind companies like Pet City and Majestic Wine Warehouse. He made around £5m having sold shares not long after the company was floated on Aim in March 1998 after being demerged from the Safeland property business. He netted a further £300,000 yesterday.

Mr Clarke, Safestore's chairman, said that the UK market had become overheated after the storage concept was imported from the US where people pay relatively low prices to rent space in large out-of-town warehouses.

"There was a lot of froth and then reality set in," he said. "I think it [the concept] works well in London and the South-east but I don't think there is much scope outside that."

Safestore has 22 sites in the UK and last year recorded an operating loss of £1.2m.

Bridgepoint said it was looking to play a part in consolidating a fragmented market, which only has a few major players such as Big Yellow, Access Storage and Spaces Personal Storage.

A Safestore spokesman said: "This is a growing market that is highly fragmented and we will be looking to open new sites and pursue opportunities for acquisitions."

Mr Clarke is also looking for deals to add to his ATL Telecoms business, which makes telephones and telex machines.

He is also hoping to improve the fortunes of Somerset County Cricket Club, where he has become chairman. Asked how the side were doing he said: "Crap so far, but we'll do better next year when we've sorted things out."