Sale on at New Look(2)

Permira and Apax could be set for a substantial return if New Look, the UK clothing retailer, goes ahead with a £2 billion secondary buyout or flotation.

New Look, the low-cost clothing retailer owned by private equity firms Apax Partners and Permira, is reportedly up for sale with a £2 billion (€2.98 billion; $3.93 billion) price tag.

At least three buyout firms have expressed an interest in buying New Look, including Texas Pacific Group, according to media reports. The company’s backers have not ruled out a possible flotation of the business on the London Stock Exchange, but a secondary sale is believed to be the most likely outcome.

Permira and Apax bought New Look in March 2004 in a £699 million deal, backing the company’s founder Tom Singh. The buyout firms have since overseen a substantial growth in the company’s retail outlets. In a media interview last week, Permira head Damon Buffini cited New Look as one of the firm’s biggest success stories, saying the company had added a million square feet of extra retail space under private equity ownership.

The sale would result in a substantial return for the two buyout firms. At a valuation of £2 billion, Permira and Apax’s combined stake would be worth about £1.2 billion. The two firms are thought to have invested about £200 million of equity in the original deal.

New Look is now the third largest women’s wear retailer in the UK. It is also planning to expand overseas, with further stores planned for the Middle East, France and Belgium.