The bold acquisitions of Jacques Vert and American Golf prove that deals can be made during tough economic times.
Why are we talking about it now?
The European arm of the US private equity powerhouse snapped up two retailers in one day in the run-up to Christmas. Sun European Partners paid £41.2m for womenswear retailer Jacques Vert, which controls Planet, Precis, Windsmoor and the eponymous brand, and is thought to have paid £50m to £60m for the UK’s largest golf specialist, American Golf.
Why has Sun European Partners made the acquisitions?
Managing director Paul Daccus says customers of Jacques Vert and American Golf have been less affected by the economic downturn than others. The private equity company does not need external finance and can complete deals quickly.
Does Sun European Partners own any other retailers?
Yes. Daccus says a third of its portfolio is retail. It has snapped up a raft of retail assets in the past few months. In September it acquired womenswear retailing group Alexon, since renamed Irisa Group, for £19m and in July it bought Dutch young fashion business Scotch & Soda.
It also owns furniture retailer ScS along with several European brands including jeans specialist Lee Cooper, Dutch department store V&D and German multichannel retailer Neckermann.
Is Sun European Partners planning further investments?
Yes, it has £2bn to invest and is planning a new fund next year.
Daccus says he has looked at other retailers but it is not actively pursuing any right now.
Sun European Partners looks for either underperforming retailers in need of a turnaround or mid-market growth companies that can benefit from its operational expertise.
Is now a good time to make retail acquisitions?
Daccus believes that good deals can be made during tough economic times.
He says: “Some may think what we do is reckless, but we’re not afraid of cycles. It’s a good time to get good quality businesses at a fair price.”
The private equity group takes a five-year view on its investments, says Daccus, and aims to make its return through profit improvement.
Will 2012 bring more private equity acquisitions in retail?
Daccus expects so. Deloitte partner Fenton Burgin agrees and forecasts more distress buys after Christmas.
Burgin said insolvency rates were expected to rise over Christmas and the New Year. “The likes of Sun and Endless are likely to step in,” adds Burgin.