Inflexion buys 20% stake in Mountain Warehouse for £45m

The deal gave Mountain Warehouse an enterprise value of £310m. The business will continue to be run by founder and CEO Mark Neale and his team.

The equity was deployed from Inflexion's specialist minority fund, Partnership Capital. The vehicle was closed on £400m in 2014, and was the first Inflexion fund to focus on minority buyouts. The GP has since raised a follow-up vehicle for that strategy, closing Partnership Capital II on a much larger £1bn in late May this year.

Inflexion stated that it had been following the business for a decade and that it would focus on helping management in their strategy of growth in the UK and international markets, as well as with their digital offering.

Previous funding
Mountain Warehouse is no stranger to private equity support. NBGI backed the business in a secondary buyout from 21 Invest in 2002. Arev then bought the business in a tertiary buyout from NBGI in July 2007 via its private equity arm Kcaj. Arev paid £15m for its stake, while a majority shareholding was acquired by Mountain Warehouse's management. NBGI reaped a 6x return on its 2002 investment.

LDC invested in Mountain Warehouse in August 2010, acquiring a minority stake as part of a £47m deal. The GP was believed to have acquired a 25% stake in the business for £10-15m, with RBS providing debt. It eventually divested Mountain Warehouse in a management buy-back worth £85m in late 2013, realising a return of more than 2x its original investment through the sale.

Company
Founded in 1997 with a single store, Mountain Warehouse is now a multi-channel business employing 3,000 people in nine countries. The group has 220 UK stores with a further 80 in the international markets of Poland, Canada, Holland, Germany, Ireland, Austria, New Zealand and the US.

Mountain Warehouse posted a £225.3m turnover in the 12 months to February 2018, marking a 22% year-on-year increase. Profit before tax amounted to £26.6m for the same period (equating to a 35% year-on-tear increase).

People
Inflexion Private Equity – Carl Wormald (partner); Edward Lynch (assistant director); Nick Rosenberg (investment executive).

Advisers
Equity – Bank of Canada (M&A); Addleshaw Goddard (legal); EY (financial due diligence, tax); Pragma (commercial due diligence).
Company – Eversheds (legal).

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• Topics
• Buyouts
• UK / Ireland
• Consumer
• Inflexion Private Equity
• United Kingdom
• Minority investing
• EY (Ernst & Young)
• Addleshaw Goddard
• Eversheds