JPMorgan analyst launches retail fund

Despite subdued consumer spending, former head of JP Morgan’s European retail equities business Matt Truman has launched a £100m fund focused on the retail and consumer space.

Matt Truman
sees opportunities
in the retail sector

Launching a retail-focused investment fund in the same month that two more high street chains have gone into administration does not seem the best timing. But it is exactly what Matt Truman, a former JP Morgan analyst has done. 

Formally launched in January, True Capital Partners is targeting £100 million, which can be increased or decreased if needed. The first close is targeted for the end of the first quarter, Truman, founder partner and chief executive, told Private Equity International. “We have only been authorised since 2 January and at the moment it is going very well,” he said. The firm is targeting retail chief executives and entrepreneurs as potential limited partners.

True Capital will invest in retail and consumer businesses with an enterprise value of up to £50 million that are well positioned for organic growth and are led by strong management teams. The firm will write equity tickets up to £15 million.

Truman is no stranger to retail investing. Before setting up True Capital Partners, he was head of JP Morgan's European retail business in equities for approximately two and a half years. Between October 2008 and March 2011, Truman worked at Nomura, as head of retail within European equities. Prior to this, Truman worked at Lehman Brothers for more than four years as the European head of retail.

In addition, Truman and Paul Cocker, a corporate financier, invested in alexandalexa, a luxury children’s clothing business in 2008. In June 2011, they sold their stake, realising more than 4.5x the invested capital, according to the firm’s website. The pair has attracted six individuals to join True Capital. Most of them have a retail backgrounds which will create an efficient deal flow, according to Truman. “Because of their experience and expertise [they] can immediately tell me if I am paying too much or not”, he said.

In tough times new niches arrive and have huge potential for growth above and beyond the overall number.

Matt Truman

The firm will do both minority and majority investments, depending on the situation. However operational influence is vital, Truman said. “We will tailor the shareholders agreement to make sure we would have that influence.” The firm plans to work alongside company founders. “We don’t want to change or reinvent their businesses. I don’t think that is applicable anymore.”   

The fund will predominantly invest in the UK and Europe, although these businesses can always be expanded abroad, Truman said. The firm will nevertheless be exposed to the subdued consumer spending climate in the UK.

In addition, the prolonged economic downturn is visibly wreaking havoc on the British retail sector. Recent casualties include camera shop Jessops and HMV, a chain of music stores that recently filed for administration.

However, Truman is optimistic about the sector. “In tough times new niches arrive and have huge potential for growth above and beyond the overall number.” Additionally, there are huge refinancing opportunities, he said.

While Truman may consider turnaround investments, it is unlikely True Capital will save HMV from demise. “There are businesses that can be restructured because of balance sheet issues, but something like HMV … a business that hasn’t reacted quick enough to the changing industry, isn’t something that’s that attractive,” he said.

HMV is reportedly being looked at by Jon Moulton’s Better Capital and turnaround investor Endless.