Barclays Private Equity sells retailer for £51.5m

Barclays Private Equity, the private equity arm of the UK bank, has sold Phase Eight, a women’s wear retailer, for £51.5 million (€78 million; $101 million), a statement said. The buyer is a consortium led by Kaupthing Principal Investments, the private equity arm of Kaupthing Bank, and including the Tchenguiz Family Trust and retail investors Michael Rahamim, Saj Shah and Ian Findlay.

Phase Eight: £51.5m deal

It is Barclays Private Equity’s second transaction of the year.  Steven Silvester, director of Barclays Private Equity, said the company has made a return of about 2.4 times its original investment, and an internal rate of return of more than 50 percent.  Barclays Private Equity invested £27 million investment in January 2005.

He said: “We’ve made a good return and now was a sensible time to sell.  The market conditions were not great for retailers generally, but for Phase Eight they were fine.”

Silvester said Barclays Private Equity hopes to make several more investments in the consumer and travel sectors this year.

David Sherratt, head of principal investments at Kaupthing, would not disclose the size of the company’s stake in Phase Eight.

David Brock, chairman of Phase Eight, has invested in the secondary buyout and will retain his role on the board.

Sherratt said Joy Walters, a former shareholder, had left the company as chief executive officer after six years, and a “high profile chief executive officer” is being brought in to replace her.  Sherratt did not disclose the recruit’s name but said he was experienced in the clothing and footwear sectors and resigned from his position last night.  He will take up his role in the next couple of months.

Phase Eight operates 56 high street stores and 92 concessions across the UK and Ireland.

Sherratt said: “There’s potential for 100 owned stores in the UK and we may take the business into the overseas market.”

Sherratt said if Kaupthing decided to expand the company overseas it would look at the Nordic region first and would also consider the Middle East, where fashion demand is similar to the UK, he said.

Hawkpoint is providing financial services to Barclays Private Equity while Addleshaw Goddard, a UK firm, is giving legal advice.

Kaupthing provided equity, debt financing and financial advice to the consortium, alongside PricewaterhouseCoopers.  Eversheds and Pinsent Masons gave legal advice.

Earlier this month Barclays Private Equity backed the management buyout of Desmet Ballestra, a provider of edible oils, bio-diesel and chemicals.  Terms were not disclosed but Thomas Grob, a manager at Barclays Private Equity, told PrivateEquityOnline that its stake in the company is more than 60 percent.  Management holds the remaining share.

Barclays Private Equity has three other clothes retailers in its portfolio.  Last month the company backed the £28 million buyout of Scala Collections, a UK retailer of Italian designed women’s clothing, shoes, and accessories.

In 2005 the company completed the £46 million buyout of Kurt Geiger, a UK luxury shoe retailer, from the Harrods Group, and owns a 72 percent stake.

It also boughjt Jack Wolfskin, a German outdoor clothing and equipment retailer, for an undisclosed amount.

Barclays Private Equity invests in business valued between €25 million and €250 million. It has a sector focus of consumer and travel, financial services, support services and healthcare.