Private Equity Cuddles Up with a Toymaker


March 15, 2017

A private equity-led group has bought one of the biggest independent toymakers on the market. Private equity firm Privet Capital announced its buyout of Vivid Toy Group. The UK-based toymaker is behind big toys such as Moshi Monsters and Care Bears.


The story of the toymaker


Vivid Toy Group started in 1993 by making toys under licence to big brands such as Thunderbirds, Crayola and Animagic. While the firm’s headquarters are in Guildford in the UK, the firm also has operations in other places, such as Paris and Hong Kong.


Its biggest operations include selling toys to major retailers in European countries, such as the UK, France and Germany. It also sells to retailers in the US, with the most notable buyers including Tesco, Wal-Mart, Toys ‘R’ Us and Amazon.


The company was bought in 2003 by in a £62 million deal by Phoenix Equity Partners. That deal led the management of Vivid Toy Group own a 35% stake in the business.


Private equity interest


On the other hand, Privet Capital is known for its ability to turn around struggling companies. It has together with its partner firm Hilco been behind the transformation of HMV. The firm’s other most recent purchases include the commercial banknote printer, Cash Processing Solutions.


Vivid Toy Group, which has been in private equity ownership since 2003, has been suffering in recent months – its bet on a new Thunderbirds range of toys didn’t go down well. This led to the private equity firm to turn its eyes on the toymaker.
However, a source told Sky News the toymaker is still making a profit. The source, who wished to remain anonymous, told the news organisation the firm’s revenue is around £83 million, with “a positive EBITDA”.


Phoenix Equity Partners was eager to sell because of its fund, used for the investment, is coming to an end. The fund started in 2001 and this is among the chief reasons it started looking for a replacement shareholder.


The plan to turn around the fortunes


Privet Capital got interested in the group largely down to its growth potential. Vardhan Rajkumar, senior partner at Privet Capital, was quoted in City A.M. stating, “Vivid is an exciting business with an impressive track record of ‘end-to-end’ excellence in each of its core functions, from procurement and product design to marketing and sales via its unrivalled distribution network and retail relationships worldwide”.


The private equity firm is expected to provide not just equity, but operational support for the firm. The firm is expected to be looking to expand its product portfolio, so it might be after new licenses with the help of the investment. Foreign markets are also an area of exploration for the firm.


The finer details of the deal were not published and things like the sale price are not yet known. Some details are known and these suggest any transaction will be through a solvent sale process and there is no requirement for an insolvency mechanism.

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