GPs give investors the best Christmas present

There was no slowdown in activity over Christmas with KKR netting a 3.9x return from Alliance Boots and BC Partners agreeing to sell half of its stake in Turkey’s largest supermarket chain

While most of us took time off to tuck into our Christmas dinners many in the private equity industry continued their work with a number of firms securing big investments or exits during the festive period.

Kohlberg Kravis Roberts agreed to sell a 50.4 percent stake in Alliance Boots to Walgreens Boots Alliance bringing the total enterprise value for the deal to £17 billion.

In 2012, KKR sold Walgreens a 45 percent stake in the company for $6.7 billion. As part of that transaction, Walgreens had the option to acquire the remaining 55 percent stake during a six month period two and a half years after the deal had closed. KKR has kept a 4.6 percent stake following the sale, which netted KKR a 3.9x return and £4.7 billion of proceeds in total, according to a source familiar with the matter. KKR declined to comment on the deal.

Meanwhile, London-based BC Partners agreed to sell half of its remaining 80.5 percent stake in Migros Ticaret, Turkey’s largest supermarket chain, to Anadolu Endustri Holding, a Turkish conglomerate, for TL26 per share, valuing the company at approximately TL 6.4 billion (€2.3 billion, $2.7 billion). The deal, which is subject to regulatory approvals, means BC is on track to net a 2x return, according to a source familiar with the matter. BC declined to comment.

UK-based Inflexion Private Equity also stayed active right up until Christmas with the acquisition of Scott Dunn Holdings, a luxury travel brand for an undisclosed amount. The firm, which recently raised £1.05 billion for UK deals, also owns online travel business On the Beach, which it bought from Living Bridge (formerly Isis Equity Partners) in October 2013.

However, not all LPs delivered great returns to LPs at Christmas. There was bad news for UK listed turnaround group Better Capital which announced on Christmas Day that City Link, a UK-based courier company it owns, would go into administration, resulting in 2,356 job losses.

The company, which was acquired by Better Capital for £1 in April 2013, had incurred substantial losses over several years. “The strain of these losses became too great and all but used up Better Capital’s £40m investment, which was made in 2013 and intended to help to turn around the company. Despite the best efforts to save City Link Limited, including marketing the company for sale, it could not continue to operate,” Hunter Kelly, joint administrator to City Link, said in a statement.

The demise of City Link was another blow to Moulton’s Better Capital, whose £210 million 2009 investment vehicle lost 10.7 percent of its net asset value in the 12 months to 31 March because a number of portfolio companies were performing “significantly below expectations”.