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Private equity likely to buy Aurora brands

Oasis, Warehouse and Coast are likely to be acquired by a private equity firm, industry sources have told Drapers.

As reported by Drapers last week, holding company Aurora Fashion Group, which is majority owned by the administrators of now-defunct Icelandic bank Kaupthing, has appointed professional services firm PwC to explore options to sell the three retailers.

Turnaround firm Alteri and Liberty and Jack Wills owner Blue Gem have been mooted as potential buyers, as has South African retailer The Foschini Group, which owns Phase Eight and Whistles.

One investment source said: “Private equity firms will definitely be interested, especially if there are easy things they can fix. The group has a big store footprint so it’s an opportunity to close some of the poor performing stores and new ownership would give them the freedom to do that.”

One City source agreed that the brand houses will “end up in private equity hands”.

But another source thought it would attract wider interest: “I would imagine The Foschini Group would look at it, as would Alteri and Blue Gem, especially after the [latter’s] Jack Wills acquisition,” he said.

“Price is important and I hear the Icelandic bank has high expectations. There’s a lot of uncertainty around at the minute so it is hard to sell anything, particularly a mid-market fashion business.”

He added: “Oasis is the jewel in the crown. Performance-wise it is an established brand with a clear identity. There is a really strong management team there: [chief executive] Liz Evans is one of the best, and there is a great team beneath her.”

Some media reports have claimed the deal would be valued at £100m. However, Drapers understands this has been overestimated.

Another source echoed the warning that it is a difficult market for selling: “A lot of UK fashion businesses are finding it difficult to trade. Anyone buying a fashion business in the UK today has to be courageous. There are so many international brands like Inditex and H&M coming over and we’re just not fast enough to keep up.”

Pre-tax profits at Coast for the year to 27 February reached £1.3m, up from a loss of £10.8m in 2015. Pre-tax profits at Oasis were up 2% year on year to £6.3m, while Warehouse reduced its losses before tax to £1.3m from £3.1m in 2015.

Foschini Group, which has more than 2,700 stores and 20 retail brands worldwide, bought 85% of Poppy Holdco Ltd, which trades as Phase Eight, for around £140m in January 2015. In March this year it acquired a substantial majority shareholding in Whistles for an undisclosed sum.

Turnaround firm Alteri has previously acquired Austin Reed Group, Jones Bootmaker and Brantano in the UK, among other fashion and footwear retailers.

BlueGem bought Liberty in 2010 and Jack Wills in October.

Drapers has contacted Alteri and BlueGem. Foschini Group declined to comment. 

 

 

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