Buyout firms chase UK retailers

Private equity firms are taking a keen interest in UK retail businesses despite warnings from the Bank of England over the fragile nature of consumer spending.

US buyout group TPG Capital confirmed it is working on a bid for British luxury shoe brand Jimmy Choo, while US peer Goode Partners is understood to be close to a buyout of retail chain All Saints.

Lion Capital, which has a number of retailers in its portfolio, is reportedly working with Goode on the deal to acquire the struggling retailer. Lion and Goode both declined to comment however.

The bids come as the Bank of England’s Monetary Policy Committee warned the near-term prospects for consumer spending had weakened over the past month. “The volume of retail sales has been broadly flat for some months … surveys of consumer confidence had remained far below their historic levels,” it said in minutes from its latest meeting. Growth for UK retail businesses is likely to come instead from expansion into faster-growing Asian markets.

All Saints is expected to fetch more than £100 million, according to press reports. Lloyds Banking Group, the company’s chief lender, confirmed it was in talks with investment groups interested in buying the business. A Lloyds spokesman said press reports the bank had given All Saints and its potential acquirers an ultimatum and deadline of Wednesday to agree a buyout were inaccurate. The bank was “supportive” of a buyout process, the spokesman said. Lloyds is understood to have provided about £29 million in working capital to the company, whose overall net debt stands at more than £50 million.

The retail chain’s majority shareholders are Icelandic banks Kaupthing and Glitnir, but they were compelled to sell their assets when the financial crisis forced them into administration.

TPG, meanwhile, is working on a bid for shoe brand Jimmy Choo. The buyout firm faces competition from US clothing company Jones Group and Bahrain-headquartered investment group Investcorp. Both rival bidders could not be reached for comment.

Jimmy Choo has been put on the block by its private equity owner, Towerbrook Capital Partners. Towerbrook bought the company for £180 million from Lion Capital in 2007. Jimmy Choo’s founder, Tamara Mellon, retains a minority stake in the business. Morgan Stanley and Goldman Sachs are managing the auction process, with bids due next month.