Change Capital buys German retailer for €29m

The retail- and consumer-focused firm has carved out a subsidiary of Italian fashion group Stefanel in an all equity deal.

UK private equity firm Change Capital Partners has kicked off investment from its latest fund with a €29 million all-equity acquisition in Germany. The firm has acquired German women’s wear brand Hallhuber from Stefanel, an Italian-listed apparel group, for a price of €25 million plus a €4 million conditional earn-out. 

Unleveraged investments among mid-market private equity firms are becoming increasingly common, as debt – even for smaller buyouts – has become scarce and expensive. Others firms to have executed un-

Hallhuber: unleveraged

leveraged acquisitions include UK Mid-market investors Dunedin and Gresham Private Equity.

An investment in the German retail sector does not mean that Change Capital Partners is calling the bottom of the economic downturn in the country, according to managing director Roger Holmes. “It is always helpful to have an economic wind behind you,” he said, “but in the mid-market area in which we operate it is much more to do with the company’s performance.”

The firm presumably hopes to replicate the performance of its investment in Jil Sander, a luxury clothing brand that it exited in September 2009. The €167 million sale value is understood to have returned three times investors’ money.

The Hallhuber deal is the first investment from Change Capital’s second fund, CCP II, which it closed on €180 million earlier this month. Its first fund has already distributed investors more than their committed capital with one investment – in UK fashion retailer Republic – yet to be realised.

The retail- and consumer-focused private equity firm recently made headlines for its loss on UK hardware retail chain Robert Dyas. The firm walked away from the investment after a six month restructuring dialoguing, writing off its investment of around £28 million.

Hallhuber has 89 outlets in its core market of Germany, with additional presences in Austria and the Netherlands, as well as a distribution deal for Switzerland. It recorded sales for the year ending December 2008 of €58.1 million and EBITDA of €4.9 million. Sales have grown in the first six months of 2009 by 13 percent, Change Capital said in a statement.