ABN AMRO retains stake in Jessops

ABN AMRO Capital has posted an IRR in excess of 40% on its investment in Jessops, the UK-based specialist photographic retailer that floated earlier this week.

Private equity companies ABN AMRO Capital has sold the majority of its interest in Jessops, the specialist photographic retailer, which floated earlier this year.

In a press release, ABN AMRO said it had achieved in internal rate of return in excess of 42 percent on the deal. This is a partially unrealised return, as the firm retained a 17 percent stake in Jessops post IPO.

ABN AMRO Capital also said that in the two years since it invested in the company, it doubled its investment on the deal. Ian Taylor, UK head of ABN AMRO Capital, said the firm had “achieved all [its] objectives” with Jessops: “to list the company, reduce its debt and support its growth potential.”    

Similar to other private equity backed IPOs this year, Jessops’ route to the public market has been challenging. In mid-October the company priced its planned initial public offering at 185p and 220p per share. However, trading began last week at 155p per share. After an initial drop on the first day, the price has been fluctuating between 150p and 155p.

ABN AMRO Capital acquired a controlling stake in Jessops in October 2002 when it led a consortium in a £116 million secondary buyout from Bridgepoint Capital. The previous backers had also hoped to achieve a flotation but twice shelved plans for a listing citing adverse market conditions.

In 2003, Dunedin Capital Partners purchased a 4.1 percent stake in the company, leaving ABN AMRO Capital with 66.8 percent and the company's management with the remainder.
 
Under ABN AMRO Capital’s ownership, Jessops has grown from 237 stores to 263. Last month it opened a shop in Dublin, its first outside the UK. The company's turnover has increased 32.9 percent from £240 million in 2002 to an estimated £319 million this year. Over the same period, its profits have increased 43.3 percent from £13.6 million to £19.5 million.
 
ABN AMRO Capital is the private equity arm of global investment bank ABN AMRO and operates in eleven countries. It specialises in mid-market buy-outs, expansion capital and public-to-private deals as well as early stage investments in life sciences and information technology.

Its recent investments include the £122.5 million buy-out of discount clothing retailer Ethel Austen, the £28.8 million buy-out of building materials manufacturer Celotex, and the £38 million buy-out of motorcycle parts supplier Frank Thomas.

This year ABN AMRO has realised proceeds of approximately €450 million from ten major exits in Europe, according to the press release.