Berkshire backs Canadian retailer

Boston-based Berkshire Partners is the second US private equity group to make a bet on a Canadian retailer in December, investing in women’s apparel company Aritzia.

Boston-based Berkshire Partners has agreed to make a cash infusion into women’s apparel retailer Aritzia. Terms of the transaction were not disclosed, although the press release issued by the company referred to deal as a “significant investment”.

Aritzia is based in Vancouver, British Columbia. The company is described as an off-shoot of department store Hill’s of Kerrisdale, and operates 18 boutiques in Vancouver, Calgary, Edmonton, Toronto and Ottawa. The company is expected to book Cdn$100 million (US$85 million, €72 million) of sales in 2006, according to the statement, which would be in line with several years of double-digit growth for the company.

Berkshire has made a number of plays in the retail sector this fall. In September, the firm agreed to acquire Party City Corp., a reseller of party supplies, and in the same month Berkshire completed its acquisition of optical retailer National Vision.

Moreover, Berkshire has also notched a couple of realisations on past retail investments, including a dividend recap of MD Beauty and a distribution of Carter’s common stock, a children’s apparel retailer floated by Berkshire in 2003.

It was this background in retail that made the firm a natural candidate to invest in Aritzia. Brian Hill, the chief executive and founder of Aritzia, cited Berkshire’s track record in the statement. “Berkshire Partners has extensive retail and consumer expertise and will provide valuable financial and strategic guidance as we expand into new markets,” he said. “Our management team knows how to run the Aritzia business; Berkshire Partners will help take us to the next level”.

Calls to Berkshire were not immediately returned by press time, although based on the how the investors plan to compose the board, it appears the growth plan will include an expansion into the US. The firm will share control of the board with Hill, and will look to recruit as many as four additional directors, explicitly specifying that they will be targeting people with “strong backgrounds in fashion, US and Canadian real estate and corporate strategy”.

Capital West Partners advised the company on the deal, while BNP Paribas and CIBC provided debt financing.

The deal comes on the heels of another retail investment in Canada. Earlier this month, Advent International and Highland Capital bought a 48 percent stake in yoga outfitter lululemon athletica.