Buyout firms circle New Look

Several buyout firms including The Blackstone Group and CVC Capital Partners are reportedly battling it out in a £2 billion auction of UK fashion retailer New Look. The deal could make up to £1.3 billion for New Look’s owners Apax Partners and Permira.

European and US private equity firms are licking their lips in anticipation of a £2 billion (€2.9 billion, $3.9 billion) auction of New Look, the UK’s third biggest fashion retailer, according to several media sources.

CVC Capital Partners has teamed up with Middle Eastern retail company The Landmark Group, which has a 3 percent stake in New Look, in the imminent auction. TPG has teamed up with Warburg Pincus while The Blackstone Group and PAI Partners are thought to be preparing individual bids.

Apax Partners and Permira, the private equity owners of New Look, hired Merrill Lynch in March to oversee a secondary buyout of the business. The two firms originally bought the company in 2004 for £699 million.

Bids are thought to be in the region of £2 billion, which would mean that Apax and Permira, which together own 66 percent of New Look, could make up to £1.3 billion between them.

The auction coincides with Permira’s pursuit of another fashion business, Valentino Fashion Group. Permira recently saw off rival bidder The Carlyle Group and has entered exclusive negotiations to acquire a further 24 percent from the Italian Marzotto family, Valentino’s next biggest investor.

Traditionally not a target for private equity capital, the fashion sector has been attracting considerable interest from buyout firms. Towerbrook Capital Partners bought iconic UK fashion brand Jimmy Choo in February from Lion Capital for £185 million (€280 million, $362 million). The deal was thought to generate a return of about 2.25 times the original investment for Lion.