UK consumer sector: private equity dealflow up 45% in 2012

Greg Gille
11 March 2013

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High street woes notwithstanding, the UK consumer sector proved to be ripe for investment opportunities last year: private equity dealflow was up by 45% compared to 2011 figures while the overall value of these investments rose by a quarter.

The UK consumer sector was home to 126 transactions worth an overall €8.5bn last year, a considerable step up from the €6.8bn recorded over 87 deals in 2011, according to unquote" data. Despite the much-publicised issues ailing several high-profile brands, activity in this segment has come a long way since the dark days of 2009: private equity investors only completed 63 deals worth an overall €1.3bn in the consumer sector that year.

The 2012 figures were considerably bolstered by a series of sizable deals taking place in the consumer sector last year. Buyouts were of course at the fore, with Iceland Foods taking the crown: South Africa's Brait Private Equity, along with Dubai-based retailer Landmark Group and Iceland's founders, backed a £1.55bn buyout of the frozen foods retailer in February. Still in the retail space, Clayton Dubilier & Rice acquired a significant stake in the buyout of discount retailer B&M Retail, a deal rumoured to be valued around the £950m mark, at the end of the year.

Further down the value range, other well-known brands managed to catch the eye of private equity players as well. In December, US-based private equity firm Leonard Green & Partners bought 25% of fashion retailer Topshop for around £350m from its parent company Arcadia. The quintessentially British car manufacturer Aston Martin also attracted a €190m investment from Italian GP Investindustrial, which bought a 37.5% stake from Kuwaiti investment house Investment Dar in December.

Although private equity investors remain hungry for strong consumer-facing assets, recent months have been a reminder that the tough trading environment will keep taking its toll on the high street. Private equity owner OpCapita – which had bought troubled electronic goods retailer Comet earlier in 2012 for a nominal £2 – called in the administrators in November. And more recently, clothing retailer Republic – then owned by TPG Capital – went into administration in February this year before being acquired by Sports Direct.