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Investor closes in on Liberty

Marco Capello, the former managing director of Merrill Lynch Global Private Equity, is poised to buy iconic London department store Liberty via his investment fund BlueGem Capital Partners.

Drapers has learnt that Capello is likely to make a move on the business in about a fortnight’s time, when Liberty is expected to have completed a £40m sale and leaseback of its Tudor-style building on Great Malborough Street.

A deal would end months of speculation over the future of the Liberty store, which was effectively put up for sale last July by its majority shareholder, property firm MWB, which hired Cavendish Corporate Finance and Global Leisure Partners as advisers.

The business has already attracted significant interest from the likes of serial luxury investor and Sirius Equity founder Robert Bensoussan and global supplier Li & Fung, but Capello is understood to have “significantly outbid” the competition to steal a march on a deal. Insiders put the value of the acquisition at in excess of £35m. As Drapers went to press, Liberty’s market capitalisation was £59.9m.

Capello, who was involved in the privatisation of Debenhams during his time at Merrill Lynch, is believed to be backing the existing management team led by Liberty chief executive Geoffroy de La Bourdonnaye. Since joining the department store from luxury goods group LVMH in 2007, de La Bourdonnaye has set about returning the store to its heritage roots - stocking exclusive brands and sometimes avant-garde fashion, but at more affordable prices - and also reconfiguring the difficult-to-manage maze of rooms and floors that characterises the unique Liberty building. He has also built a new management team.

Sales at Liberty climbed 20% in 2009 and the business broke into positive EBITDA for the six months to June 30, recording EBITDA of £30,000 against a £2.7m loss in the equivalent period the previous year.

As well as its flagship store, where revenue increased 16% last year, Liberty has a highly successful wholesale fabric business. Fabric sales grew 23% in 2009, boosted in part by the recent trend for ditsy floral prints. High street retailers such as Topshop and Gap both used Liberty prints in their collections last year. The fabric business is believed to generate about £5m profit.

Liberty was founded in 1875 by Arthur Lasenby Liberty.

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