Private equity 'unlikely to buy 3i's troubled Chorion'

Susannah Birkwood
02 September 2011

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Private equity firms are unlikely to show much appetite for struggling 3i-backed Chorion, the owner of the Mr Men franchise, corporate finance adviser Jeremy Rayment said today.

The London-based company, which also owns the Noddy and Agatha Christie brands, is to be broken up and sold after failing to refinance its debt. However, according to Rayment, a director at Menzies Corporate Finance, it would be surprising if ex-company chairman Lord Alli's attempts to attract private equity firms came to fruition because "as its stands they would be faced with the same issues of diminishing risk and return, and debt levels which look untenable".

The deal is expected to have hit 3i hard, making comparisons with APAX Partners' write-down by some £325m of its investment in HIT Entertainment last year seem inevitable. Chorion itself is believed to have considered purchasing HIT earlier this year. "[3i] will most likely already have written [Chorion] down in their books," adds Rayment.

3i's original take-private of Chorion was completed near the height of the market bubble, in 2006, when business values and debt availability were at their peak. The deal valued the company at around £134m, with the investor taking an initial 75% stake. It was supported by a £78.5m debt package provided by GE Commercial Finance and was originated via an existing relationship between 3i and the Chorion management team.

In 2007, Chorion went on to acquire copyright agents The Copyrights Group, with backing from 3i.