Phoenix makes 3.8x from handbags

Exponent Private Equity has bought handbag company Radley from Phoenix Equity Partners, which exited the company after slightly more than a year and a half having “made it feel like an entirely different business”.

Phoenix Equity Partners has sold its 55 percent stake in handbag and luggage company Radley to Exponent Private Equity, valuing the entire business at £130 million (€180.6 million; $266 million), according to a statement.

A different business

Phoenix made proceeds of £64 million, a multiple of 3.8x its original investment of £16.8 million. This represents an internal rate of return of more than 120 percent.

Radley sells handbags, luggage and accessories. Phoenix doubled EBITDA at the business from £6.4 million in the year ending April 2006 to an estimated £12.5 million in the year ending April 2008.

The bag maker has a 14 percent market share of the hand bag market in the UK. Its revenues are expected to exceed £60 million in the year ending April 2008 and they have increased by an average of nearly 30 percent per annum during the last 5 years.

Tim Dunn, a principal at Phoenix, said the business’ growth was spurred on by Phoenix bringing in new management, including Roger Best the chief executive, setting up “a state of the art” distribution centre in Milton Keynes as well as screening retailers to improve presentation and moving the company into a new head office.

“All things taken together have made it feel like an entirely different business,” Dunn said. The firm had provided corporate expertise to realise the potential of an attractive product, he said.

Dunn said the growth had been driven by Radley’s core handbag product, which accounted for 80 percent of the revenue.

The bag brand is launching in the US next spring. It already sells in South-East Asia. Its first store opened in Dubai in September.

Two months ago Phoenix bought organic box company Abel & Cole for between £30 million to £40 million. Phoenix has invested a third of its £375 million fund raised in April 2006, Dunn said.

Other investments made by Exponent include UK teaching publication The Times Educational Supplement, internet ticket company

Travers Smith advised Phoenix on the sale of Radley.