Retail sector activity benefits from economic woes

Retail has been one of the most active sectors in 2012 and the early days of the new year do not suggest a change in that trend. UK highstreet music and DVD retailer HMV went into administration earlier this week, leaving the window for private equity investors wide open. Possible bidders include turnaround specialist Endless, Better Capital and Oakley Capital.

Simultaneously, Advent International is set to exit airport retail business Dufry, which is listed on the Swiss Stock Exchange. The sale of a remaining 13% stake could yield up to €350m.

Retail-focused private equtiy firms are ceasing opportunities to pick competitively priced assets as the sector faces current economic conditions. The retail sector is notably faced with an ongoing change in consumer purchasing behavior; HMV, for example, faces serious competition from eCommerce businesses such as Amazon and Apple's iTunes.

In 2012, a number of retail deals took place in the food segment, with the largest buyout of the year being Brait Private Equity's acquisition of Iceland Foods for £1.55bn, supported by a £860m debt package.

May and October saw most deals done in the retail sector, with August representing the traditional summer dip. Exits stayed constant throughout the year, recorded up to three divestments per month.

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