US private equity group Global Innovation Partners is reported to be backing Gareth Jones, the former chief executive of financial services group Abbey National's wholesale finance arm, in a bid for UK food retailer Somerfield.
Until late 2001, Jones was the chief executive of Abbey National Treasury Services (ANTS), which ran a number of wholesale finance units including leasing business Porterbrook. Significant losses from its high yield bond investment activities and, subsequently, further provisions against its private equity investments encouraged Abbey National, which has since changed chief executives, to restructure the group.
According to the Financial Times, Jones, who was formerly a non-executive director of Somerfield, is considering joining the throng of interested parties circling the company that owns both the Somerfield and Kwik Save chains. Somerfield has so far rejected any approaches including a £593m bid approach from retail entrepreneur John Lovering and Bob Mackenzie, the former chief executive of National Car Parks, who were looking to sell on part of the chain to larger UK food retailing group J Sainsbury PLC.
Somerfield announced its prelimary 2002/3 results on Wednesday of this week, showing a small increase in operating profit to £30.1m, compared with £28.1m last year.
'While we are pleased to report further progress in rebuilding profitability, we recognise that the pace of recovery was not fast enough. However, following organisational changes, we have a strong executive management team focused on delivering the renewal of the Company with urgency and pace,' said John von Spreckelsen, executive chairman of Somerfield in a statement accompanying the results. Jones left the Somerfield board in 2002 after what the FT describes as a 'fundamental disagreement' with von Spreckelsen.
As the UK retailing sector continues to reshape, with various deals presently being negotiated including bids for Debenhams, Selfridges and Safeway, numerous private equity firms are participating in the process. One resaon is the potential to realise significant value from the property assets many retailing groups own. This is a key driver to the current Debenhams bid for eaxmple.
Global Innovation Partners is headquartered in Menlo Park, with offices in London, Los Angeles and Paris. On its website, the firm says that it seeks to leverage its expertise in private equity, real estate and venture capital 'to offer creative solutions for our portfolio companies and real estate assets.'
The firm's first fund, Global Innovation Partners I, was closed in March of 2001 with $526m of committed capital.