SIR PHILIP Green has sold a 25 per cent stake in his family’s Topshop empire to a US private equity firm in a deal that values the successful high street chain at £2bn.
Arcadia, the retail tycoon’s holding company, confirmed yesterday it has sold off a £500m stake in its prized Topshop and Top Man brands to Leonard Green Partners (LGP), a Los Angeles based firm.
Sir Philip said the sale will pave the way for the retailer’s expansion overseas and in the US, where it has already opened four flagship stores and recently agreed a tie-up with Nordstrom department stores.
He said the cash received from the sale will stay within the Arcadia group, leaving it debt-free and offering the “flexibility to look at other opportunities.”
The sales is one of Arcadia’s biggest deals to date and comes 10 years after Sir Philip and his wife Lady Tina bought Arcadia in 2002 for £850m. He has since tried and failed twice to buy the retailer Marks & Spencer.
It is also the first time the family have introduced outside investment into the Monaco-based company.
“This is a very exciting time for the Arcadia Group, with a clear strategy now in place for Topshop and Topman to become major global players,” Sir Philip said in a statement.
In recently published full-year results the Arcadia group, which also owns Bhs, Dorothy Perkins, Miss Selfridge, Burton, Evans and Wallis, reported a 25 per cent surge in profits to £166.9m.
Like his peers, Sir Philip admitted times were tough for the high street but he implored retailers to stop moaning about the economic downturn and to “up our game”.
Analysts said the deal agreed with Leonard Green was “a vote of confidence in Sir Philip” and the strength of the Topshop brand. The fashion retailer has 300-plus UK stores and 615 franchised shops in 39 countries.
LEONARD GREEN & PARTNERS
Private equity firm Leonard Green & Partners (LGP) has raised more than $15bn (£9.3bn) of private equity capital since it first launched in 1989, investing in over 62 mid-cap companies from retail to finance and healthcare.
The Los-Angeles-based firm has US retail companies including upmarket department store chain Neiman Marcus, luxury watch brand Tourneau and sports retail giant Sports Authority. In 2008, it snapped up a 17 per cent stake in organic grocery chain Whole Foods for $425m that was then struggling and in desperate need of cash. Last year it sold more than 15.7m shares in the group, making a gain of $540m before applicable taxes.
The firm has a history of working with fellow private equity firm TPG Capital and the pair together bought J Crew, the US fashion brand worn by Michelle Obama, in 2010 for $3bn (£1.8bn). In October the pair sold their stake in bridal-wear company David’s Bridal to buy-out firm Clayton, Dubilier & Rice in a deal that valued the company at $1.05bn.
Leonard Green, which is run by its three managing partners Jonathan Sokoloff, Peter J. Nolan and John G. Danhakl, closed a $6bn fund in May, its sixth and biggest buy-out fund to go on a further spending spree.