Dominic Chappell had “ambitious” plans to acquire more retailers after Retail Acquisitions snapped up BHS, advisers have revealed.

Entrepreneur Chappell, who had been declared bankrupt before the department store chain was sold to his Retail Acquisitions consortium for £1 last March, had been eyeing a Swiss retailer and “a small UK retailer”, it emerged in Parliament today.

Chappell had also seemingly been targeting a takeover of Sir Philip Green’s wider Arcadia Group, according to the wording in a letter read out at the joint inquiry by the Work and Pensions Committee and the Business, Innovation and Skills Committee today.

The engagement letter sent to City stockbrokers Cornhill Capital by Retail Acquisitions read: “Subject to the completion of the transaction [for BHS] and the subsequent acquisition of the Arcadia Group…”

“There was a Swiss retailer that was mentioned, there was a small UK retailer that was also mentioned, so the plans were ambitious.”

Andrew Frangos, Cornhill Capital

When questioned by MPs on whether that was a mistake or whether Retail Acquisitions wanted to buy the wider Arcadia Group – which owns fashion fascias including Burton and Dorothy Perkins – Andrew Frangos, chief executive of Cornhill Capital, said: “It was a very ambitious transaction when it came through the front door in the first place as a BHS acquisition.

“There were lots of different transactions also discussed along the way.

“He [Chappell] indicated that it could go on to do other deals, including other retail brands.”

When asked by MPs whether Chappell was “all mouth and no trousers” by outlining those plans, Frangos, whose firm was drafted in to drum up outside investment, added: “When we were interacting with Dominic, we’re thinking: ‘This is hugely ambitious. Is this real? Does it have a realistic chance of success?’

“For us, it’s a success-only engagement – it’s a bit of a punt.

“There was a Swiss retailer that was mentioned, there was a small UK retailer that was also mentioned, so the plans, as I say, were ambitious.

“As time passed, they seemed to gather credibility because they appeared to become more and more real.”

Question marks

Frangos said he did not know Chappell had been bankrupt when he first met him, but other advisers revealed to the joint committee that they were aware of his history of insolvency before Retail Acquisitions acquired BHS.

Stephen Hermer, partner at law firm Olswang, admitted that “online searches against risk intelligence databases” and additional searches revealed that Chappell had two “insolvency-related incidents in his history”, including his 2009 bankruptcy.

Hermer added that because of his past, there was “clearly a question mark over Mr Chappell’s business acumen” prior to the sale.

Mark Byers, partner at Grant Thornton, which was appointed to carry out financial due diligence on BHS, added that the business plan to turn the retailer around had been compiled by existing management at the department store chain, not by Chappell.

Frangos added that numbers ranging “from £30m to £200m” were discussed with Retail Acquisitions with regards with how much capital would be required to carry out that transformation strategy.

Chappell and former BHS owner Green will both appear before the joint committee on separate dates next month.