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New Look unlikely to float as City confidence crumbles

Young fashion chain New Look is unlikely to float, according to leading City analysts, following a loss of confidence in fashion retail IPOs after Debenhams returned to market last year.

A secondary buyout is the favoured option, with several potential bidders from the private equity sector stating an interest, including Texas Pacific Capital.

Retail conglomerate The Landmark Group, which is a New Look franchise partner, is also understood to be circling the £2 billion business, Drapers can reveal.

Investec analyst Mark Charnock said it was unlikely New Look would float. "When New Look was listed three years ago, the market didn't put a very high valuation on it," he said. "Debenhams' move back to market has made the City sceptical, so a buyout will be the most likely outcome."

Since returning to market, Debenhams' poor sales performance has failed to impress the City.

One leading City analyst said he would be wary of New Look if it were to re-list. "However much New Look tries to talk itself up, sales were poor last year. What it is doing at the moment is a bit of fly fishing, which makes it sound like it doesn't have the confidence to bring it back to the market. The business will already be quite highly borrowed and coming back to the market like that is an issue. That worries people."

Seymour Pierce analyst Richard Ratner said the process could continue for three to four months. "After the Debenhams fiasco, my gut feeling is that they will sell. New Look has a good management team and strong potential for roll-out, is much better run than the department store and is a good opportunity."

Teather and Greenwood analyst Rhys Williams said it was tough to call. "New Look will look at the possibilities and move on whichever turns out to be the cheapest and gives greatest value. I suspect this will burn on through summer," he added.

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