It’s hard to believe that little more than year ago, fashion group New Look hoped to pull off an IPO.
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Next week New Look is expected to post prelims and the likelihood is that, after a year everyone at the retailer will want to forget, there will be little to excite.
Since late last year, almost all the news from New Look has been bad: flat first-half profits, a dreadful Christmas and the departure of boss Carl McPhail.
On top of all that New Look’s relationship with its investors, private equity firms Apax and Permira, is changing. The individuals who did the New Look deal have left, in the case of Apax’s Alex Fortescue who is now at Electra, or are leaving, in the case of Permira’s Martin Clarke.
Since SVG Capital, the quoted investment vehicle focused on Permira funds, cut the valuation of its New Look stake to zero in April, the likelihood is that New Look isn’t top of the pops with its owners. So how are they likely to respond now that the personal connections are looser?
The private equity personnel changes will prompt no rush to get out of the investment, and it is understood Clarke will remain on the New Look board.
Now that founder Tom Singh is intimately involved again and former Matalan boss Alistair McGeorge has been installed as chairman, the backers will let them get on with running the business but with eyes firmly fixed on an eventual get-out.
Eventual is the important word. The likelihood is that it will be some years before New Look can reconsider an IPO but it makes sense for the owners to sit things out for a while and get the best price they can.
They haven’t done badly so far and there is no need for a fire sale. SVG, for instance, has made twice the cost of its original investment so far. New Look’s investors will hope that there is more to come from the retailer and, once that is evident, that City memories of the last year’s debacle will fade.