New Look purchased for £780 million

<p>South African magnate buys 90 per cent share in the fashion retailer.</p>

Brait, the private equity vehicle of South African billionaire Christo Wiese, has bought clothing store New Look for £780 million.

The sale gives Mr Wiese a 90 per cent stake in the company. The remaining ten per cent stake is controlled by the family of Tom Singh – the man who founded the budget fashion chain in 1969.

'A hard bargain'

The business, which has expanded to include more than 800 stores in 21 countries is currently carrying around £1 billion in debt. It was sold by private equity firms Apax and Permira.

In 2004, the chain went private in a £700 million deal after the company had spent six years listed on the London stock market.

Plans to relist the company in 2010 fell through due to volatile market conditions, reports the BBC.

Retail analyst Nick Bubb told the BBC that the two private equity firms were "desperate to sell" – he says that flotation never looked likely due to the company's previous difficulties in the UK market.

Mr Bubb explained that the firm's current situation meant that Brait would have been able to "drive quite a hard bargain".

He said: "Whether New Look's recent revival can be sustained is another matter, given the surplus capacity in the UK fashion market.

Sky News reports that other bidders for the company had included a joint offer between Chinese buyout firm CDH and Claydon Dubilier & Rice. Ex-Tesco boss Sir Terry Leahy is an advisor for the latter.

Growth potential abroad

According to Brait, one of the benefits of the purchase was New Look's growth prospects abroad – particularly in China and Europe.

"It is a market-leading brand with a strong tack record of double-digit earnings growth," said chief executive John Gnodde.

Chairman Paul Mason agreed. "This is an ideal outcome for New Look. The Brait team demonstrated to us that they have the long-term vision to help Anders and the team grow this brand," he said.​

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.