Apollo-backed Retail Vehicle Eyeing BHS


March 9, 2015

The Sunday newspapers reported that a private equity backed retail vehicle, Alteri Investors, is set to bid for the high street retailer BHS. BHS owner Sir Philip Green announced in January that the retailer has been receiving plenty of interest from private equity firms and a sale is possible. Now one of Sir Philip’s former advisors is set to launch a bid together with Alteri Investors.


Alteri Investors Uniting With Tony Brown
The Telegraph reported on Sunday that Tony Brown, ex-senior director of the retailer, is working together with Alteri Investors. Gavin George, the man behind Alteri Investors, only set up the specialist retail vehicle in 2014 and is now planning to unite with Mr Brown. The private equity firm Apollo Global Management backs the investment vehicle.


Mr Brown has worked with Sir Philip for several years and would have plenty of knowledge of the company. He left BHS in 2008 to join the mini-department store chain Beales as the chief executive. He has also worked with Peacocks, and the 99p Stores, which was recently purchased by Poundland in a £55 million deal.


Struggling Retailer
BHS has been going through a rough time recently, together with other high street giants, as customers are moving towards online shopping. In January, Sir Philip announced the company is looking for a sale, as a number of private equity and investment vehicles had approached the company.


The holding company Arcadia told last year the cash losses for the retailer had increased from £19 million to £21 million. This has dragged down the profits for the holding company, at a time when some of its other retailing outlets are doing relatively well. BHS currently has 180 stores and the company employs around 12,000 people. But like many high street companies, it has suffered from weak consumer confidence and the rise of online shopping.


Closing the Deal?
According to the This is Money website, a deal between Alteri Investors and BHS could take place as early as the coming week, but there are also other investment vehicles still involved in the talks. The website quoted a source close to the talks saying, “it’s not over until it’s over”.


But the private equity backed retail vehicle might face stiff competition from companies like Matalan. According to people close to the matter, the clothing giant is considering a bid for a number of individual BHS stores. Matalan has been looking into the possibility of opening up more stores on the high street, with BHS providing plenty of lucrative retail space.


Valuable Property
In fact, much of the interest around the struggling retailer is down to its attractive retail space. The company is currently debt free and it has the ownership to many of the spaces is operates from. To analysts, this creates a powerful incentive for turnaround companies, such as Alteri Investors to go after the firm. Mr George has been involved with a number of similar deals in recent months, so the bid stands on a strong footing.


It remains to be seen whether more private equity firms get interested or if Alteri Investors can finalise the deal in the coming days.


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