YFM wins big with small retail investment

The sale of the outdoor clothing and equipment retailer GO Outdoors 18 years after its initial investment will deliver around 40x for the SME specialist’s investors.

UK SME specialist YFM Equity Partners has sold outdoor clothing and equipment retailer GO Outdoors to JD Sports Fashion for £130 million ($161 million; €152 million), according to a statement.

The sale, together with a partial realisation in 2011, delivers a total return to YFM and its investors of £23 million, a return of approximately 37x.

YFM originally invested in the business in 1998 in a transaction that valued it at £1.3 million, according to its website. At the time of its original investment, alongside founders Paul Caplan and John Graham, GO Outdoors had just one store in Sheffield generating £2 million in sales.

Today, GO Outdoors operates 58 stores and employs more than 2000 people.

For the 53-week period ended 31 January 2016, GO Outdoors had consolidated revenues of £202.2 million, an operating profit of £6.1 million, a profit before tax of £4.9 million and gross assets of £76.4 million, according to JD Sports.

Following completion of the transaction, founders Caplan and Graham will leave the business.

London-listed 3i Group invested £28 million for a minority stake in the business in April 2011. It is understood that 3i and its funds will receive proceeds of around £34 million from the sale.

The exit provides a timely boost for YFM as it continues to raise its latest vehicle, YFM Equity Partners 2016 Fund. YFM held a “dry close” on the vehicle, which is seeking to raise a total of £40 million, on £22 million in June, as reported by PEI.

YFMEP 2016 is the first in a series of funds planned by YFM which will have investment periods of two years. It is looking to invest between £2 million and £10 million in around 10 businesses.

The firm has already started putting the capital to work. Earlier this month YFM, alongside private co-investors, backed the MBO of rubber and metal manufacturer Ferrabyrne.

The sale of GO Outdoors follows that of President Engineering, which delivered an 8x return, and Waterfall Services, which delivered 5x. YFM has delivered a 3x return from its last 29 exits, the firm said.