Better Capital, the turnaround firm led by Jon Moulton, has acquired a 90 percent stake in UK fashion retailer Jaeger, as well as all of the company’s secured debt, for a total of £19.5 million (€24m; $31m).
The investment represents an enterprise value of £39 million, according to a source close to the process. The firm said the “substantial majority” of the sum was used to acquire the secured debt with the “remainder in respect of the equity stake”.
Better Capital, which favours eliminating all debt at acquisition, has bought up an £18.5 million facility from Lloyds, according to a source close to the firm.
Jaeger is a UK-based high-end fashion brand and retailer of womenswear and menswear operating from 150 outlets in the UK, most of which are concessions, as well as overseas.
“The brand name” was the reason for the investment, Better chairman Jon Moulton told Private Equity International. “It’s a company with history and with impact,” he added.
It's a company with history and with impact.
Moulton said Jaeger was trading “not badly” – the company’s audited revenues and operating profit were £94 million and £1 million respectively for the year to 28 February 2011, at which date the group's net assets were £11 million, the firm said.
“We intend to improve the brand image, rationalise the store portfolio, and get the brand to move internationally – there’s a lot more that needs to be done in that area,” said Moulton.
Better Capital is trading at a significant premium to NAV, something which Moulton described as “quite a singularity” in the listed private equity arena.
At a time when many listed private equity firms are facing massive discounts to net asset value, Better Capital is the only listed firm in the UK whose shares are trading at a premium.
Better’s second fund BECAP12 and its predecessor BECAP09 are running premiums to NAV of 13 percent and 35 percent respectively at press time, according to Morningstar.
“It’s partly because of what we do, but almost as much because of the structure of the fund which realistically isn’t permanent capital, so we don’t have the difficult-to-avoid problem of continuous capital drain where you either have to hold spare cash or risk taking on debt,” said Moulton.
The firm converted to a protected cell company structure in January following a £170 million close on BECAP12 in December. That fund is now 40 percent invested according to a source close to the firm.