Private Equity News & Analysis

Apollo gets fashionable in retail deal

NRDC Equity Partners, a partnership between Apollo Real Estate and National Realty & Development Corp, will integrate Canada’s largest retailer with Lord & Taylor, Fortunoff and Creative Design Studios as part of a new holding company.

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NRDC Equity Partners, a partnership between principals of Apollo Real Estate Advisors and National Realty & Development Corp, will invest $500 million (€315 million) of equity in newly formed holding company Hudson’s Bay Trading.

The Purchase, New York-based private equity firm acquired Canadian retailer Hudson’s Bay from The InterTech Group and has consolidated the acquired company with department store chain Lord & Taylor, home furnishings retailer Fortunoff and Creative Design Studios (CDS) under a single umbrella. Financial details were not disclosed.

InterTech is a diversified holding company headed by the Zucker family and based in Charleston, South Carolina. Hudson’s Bay – established in 1670 – is Canada’s largest retailer, with 580 outlets in the country. The company was taken private though the InterTech affiliate True North Retail Investments in 2006.

NRDC, has been a minority owner in Hudson’s Bay in partnership with the Zucker family and NRDC chairman and chief executive Richard Baker since the company was taken private. Baker has been appointed chief executive of Hudson’s Bay Trading. The sale is believed to have been prompted following the death of Hudson's Bay chief executive officer Jerry Zucker earlier this year.

NRDC acquired struggling department store chain Lord & Taylor from Federated Department Stores for $1.2 billion in cash in 2006. The firm’s purchase of Fortunoff was finalised in March 2008 after the jewelry and home furnishings company filed for Chapter 11 the previous month. CDS is an entity formed by NRDC to manage its stable of designer clothing labels including Peter Som, Kate Hill, Context and Black Brown 1826.

The combined company, under the ownership of NRDC, will upgrade offerings at Canadian department store chains The Bay and Zellers and launch Lord & Taylor and Fortunoff locations throughout Canada among other initiatives.

NRDC was founded by Apollo Real Estate Advisors partners William (Bill) Mack and Lee Neibart together with former National Realty & Development Corporation executives Richard Baker and Robert Baker. The private equity real estate firm targets the retail, leisure, lodging, and commercial real estate sectors.