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Charterhouse scores 5.25x on Card Factory

Charterhouse’s Fund IX has now returned more than €3bn to investors

Charterhouse Capital Partners has exited its stake in Card Factory, selling its remaining 60,609,953 shares in the company to a number of institutional investors, according to a statement.

Charterhouse purchased Card Factory for £350 million from LDC in April 2010. The firm, which owned an approximate 60 percent stake, acquired the company using its Charterhouse Capital Partners IX No.1, Charterhouse Capital Partners IX LP No.2 and Charterhouse Capital Partners IX Co-Investment LP funds.

Card Factory was established in 1997 as a one-store discount retailer and has been developed, through organic growth and add-on acquisitions, into a value retailer. The business, which has more than 700 stores in the UK, sold over 285 million single cards in the financial year ended 31 January 2014. In that year, the group achieved revenue growth of 9 percent to £326.9 million and underlying EBITDA growth of 9.2 percent to £80.4 million, compared to £73.6 million in 2013.

Under Charterhouse’s ownership the business grew significantly; it opened circa 280 new stores, developed its in-house card printing facility, and built a new corporate headquarters as well as two new warehouses. Charterhouse listed the business in May last year and has been reducing its stake since then.

“We saw a great deal of potential in Card Factory back in 2010, with its experienced leadership team, defensible market position and high-quality fundamentals. It has been a pleasure partnering with management to unlock that potential and build a company that is a true success story for the UK economy,” Graeme Coulthard, a partner at Charterhouse, said in the statement.

Last month, Charterhouse Capital Partners IX, a €4 billion vehicle, was valued at 1.8x, representing an internal rate of return of 27 percent, PEI reported at the time. Together with Card Factory, Charterhouse has exited four businesses from this portfolio, returning more than €3 billion to investors, according to a source familiar with the matter.

Charterhouse declined to comment beyond the statement.

In February, Charterhouse sold its stake in skincare company Deb Group to SC Johnson, a manufacturer of household products, netting the firm a return of more than 2.5x. Last July, Charterhouse sold Bureau Van Dijk, a business and financial publisher specialising in private company information, to EQT, while in July 2012, it sold its stake in energy and metal industries research company Wood Mackenzie in a secondary sale to Hellmann & Friedman.

Charterhouse will be keen to return capital to investors as it is currently in market raising Charterhouse Capital Partners X which has a target of approximately €3 billion. Charterhouse typically invests in European companies, targeting transaction values ranging from €250 million to €2 billion.