New Look agrees takeover by South African tycoon Wiese's Brait
UK fashion chain New Look, which was planning a flotation in London, has instead agreed to a £780m takeover by Brait, the private equity vehicle of South African retail tycoon Christo Wiese.
Brait will buy 90% of New Look in a deal that, including the debt built up by owners Apax and Permira since they bought the chain in 2004, values the womenswear retailer at almost £1.9bn.
Independent retail analyst Nick Bubb noted that long-suffering private equity owner "were desperate to sell after no less than 11 years of ownership,and an IPO never looked a runner - given New Look’s very chequered UK history and the unproven Chinese potential, so Christo Wiese has probably been able to drive quite a hard bargain".
New Look directors were reported to have cancelled analyst meetings scheduled for Friday about its potential listing, according to Sky News.
Apax and Permira had reportedly held talks with several Chinese investors, including private equity funds CDH and Citic Capital, and, most notably, Fosun, which bought Club Med and a stake in Thomas Cook earlier this year.
But 72-year-old Weise, who was in the running to buy BHS from Sir Philip Green, has apparently won the battle as he steps up his interest in the UK, having recently backed a new budget clothing chain run by ex-Asda chief executive Andy Bond and bought an 80% stake in Richard Branson's gym group Virgin Active for around £700m.
The South African tycoon is helping fund the speedy roll-out of Bond's new vehicle, Pep & Co, into 50 'secondary locations' around the UK.
Pep, whose management team includes ex-Sainsbury's Tu clothing executive Adrian Mountford, drummed up £20m for this first round of expansion, setting it up as rival to the popular Primark and Matalan chains, as well as the Asda George clothing label Bond ran for five year before becoming group chief.
Bubb questioned whether New Look’s recent revival can be sustained, given the surplus capacity in the UK fast fashion market which would be even more crowded thanks to the new competition from Pep.
Nevertheless, John Gnodde, the CEO of Brait, said: “New Look is an attractive investment opportunity for Brait. We have been highly impressed with the management team and look forward to partnering with them.”