Apax, Permira exit could herald new look IPO

Fashion retailer New Look has confirmed plans to float on the London Stock Exchange, in a deal that could value the business at a whopping £1.7bn. If successful, the listing would represent a strong success for its private equity owners Permira and Apax, who have been toying with an exit for the company since before the downturn.

So far, January seems to have been all about the return of SBO's - could this deal be the first in an anticipated wave of public market flotations? Mark Davis,  head of private equity at law firm Taylor Wessing thinks so.

"Secondary buyouts and trade sales have an advantage in that they allow the vendor to make a clean break from the company and they avoid the uncertainty over pricing that plague IPOs. I'm not convinced buyers will continue to pay such high prices, however, and there could be a real uptick in IPOs from Q2 onwards," he explains.

The exit could also be the first in a different type of IPO: New Look has said that the £650m it plans to raise from the primary offering would be used to pay down its debt, rather than merely to cash out the private equity owners.

This would be a welcome change, as listing highly geared companies without significantly reducing leverage leaves the business vulnerable when the loans reach maturity, particularly given the limited refinancing capacity.

After the IPO completes, New Look will have net debt of around £450m or less 2x EBITDA.

The business has said that a "limited secondary sell-down" by existing shareholders is a possibility, but according to sources close to the deal this is unlikely, as there is not enough market capacity in the current economic climate.

New Look's private equity owners will likely be locked down for a period of at least 12 months.

Permira and Apax took New Look private in 2004, having each invested £100m into the deal, which valued the company at almost £700m. Permira and Apax both assumed a 31% stake in the business. Since that time, the two owners have invested more than £450m into the business.

Credit Suisse, HSBC and Hypo Vereinsbank jointly arranged £385m in senior debt and £100m in mezzanine to facilitate the transaction.

The company recorded a turnover of £1.3bn last year with EBITDA of £218m. It has more than 1,000 stores, 601 of which are in the UK.

The IPO is expected to complete in mid-March. Credit Suisse, Deutsche Bank and JP Morgan Cazenove are acting as joint sponsors and bookrunners for the offer.

 

 

 

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• Exits
• UK / Ireland
• Consumer
• Apax Partners
• Secondary buyout
• Flotation
• Permira