3i sells Giraffe to Tesco for £49m(2)

The exit from the UK restaurant chain is 3i’s third of 2013, as the London-listed group aims to improve its disposal activity compared with last year.

3i has sold
chain Giraffe
to Tesco. 

3i Group has sold its 36.8 percent stake in restaurant group Giraffe to UK supermarket chain Tesco for £48.6 million ($72.8 million, €55.6 million). The London-listed group, which invested £10 million in Giraffe in 2006, generated a 1.6x return from the exit, according to a statement. 

3i, which invested alongside Risk Capital Partners, helped Giraffe expand from its London high street base to become a nationwide presence. During 3i’s ownership, Giraffe grew from 11 to 48 sites in shopping malls, leisure developments and in transport hubs, including Giraffe Stop! at London’s Kings Cross train station and five UK airport franchises. The restaurant chain also recently opened its first international site, in Dubai’s new airport terminal.

3i said Giraffe had also gained access to improved debt facilities to support the expansion programme, build its management infrastructure and improve its portfolio analysis and returns. According to Justin Maltz, a 3i director, the investment has been “a great example of 3i’s ability to back entrepreneurs to significantly scale up their business by providing growth capital”, he said.

3i’s divestment of Giraffe is the group's third exit so far this year. In February, it sold Canadian manufacturer Mold-Masters to trade buyer Milacron for CAD$ 975m (£615 million), netting a 2.6x return. In January it also sold its stake in Norma Group, a German engineering business, reportedly generating a 5.5x return.

These exits come after 3i’s realisation proceeds for the nine months to 31 December 2012 fell to £210 million, down from £741 million in the same period the previous year. The firm had fewer resources available, as 3i’s chief executive Simon Borrows cut staff by a third and closed a number of offices as part of a major restructuring programme.

In a recent interim statement, Borrows insisted 3i would be much more active in the coming months “with a number of key realisations as well as an increasing level of investment activity”.

Last week, 3i agreed to acquire Brazilian eyeglass retailer Óticas Carol in a deal that includes R$108 million (€42.2 million; $54.9 million) in equity.