TSG's Bergfreunde hits the market in JPMorgan-led auction

Johannes Koch and Patrick Costello
03 July 2023

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TSG Consumer-backed outdoor gear specialist Backcountry is selling Bergfreunde with JPMorgan guiding an auction process, three sources familiar with the situation said.

The German online retailer of outdoor clothing and equipment is expected to generate FY23 EBITDA of EUR 13m to EUR 16m, depending on adjustments, the sources said. Interested buyers as well as potential lenders, who may wish to support private equity bids, have been approached with marketing materials, they added.

A lender education may take place if sufficient interest is registered, one source noted.

The company's performance during the COVID-19 pandemic came in strong with adjusted FY21 EBITDA hitting EUR 27m, supported by consumers flocking to its site to buy outdoor gear, this source continued.

That spike proved unsustainable and the e-commerce sector is currently on a downward trend, another of the sources noted. The business cannot win additional market share from stationary retail, and is also sitting on a lot of inventory and moving products at low margins, the source added. Given this, its forward-looking EBITDA is likely at the lower end of the range, they said.

With persistent inflationary pressures and a decline in discretionary consumer spending, some financiers are likely to avoid the e-commerce retailer all together, two of the sources noted.

Bergfreunde has seen steady growth over the years, generating FY21 EBITDA of EUR 25m on sales of EUR 203m, up from FY20 EBITDA of 17m and EUR 155m in sales, according to the company's most recent public filing.

It had EUR 12m of free cash flow and no debt to service at the end of the year, and also did not draw down any of its available bank credits in 2021, according to the filing.

The company expected FY22 sales to rise and EBITDA to remain at roughly the same level, with cash flow to diminish with its additional, planned investments, as per the filing.

Based in Kirchentellinsfurt, Tuebingen and founded in 2006, Bergfreunde sells a range of outdoor clothes and equipment, with a focus on climbing and mountaineering gear, across 12 European markets. Backcountry acquired the business from its founders in 2013.

TSG and JPMorgan declined to comment. Bergfreunde and Backcountry did not respond to requests for comment.