Tesco snaps up Giraffe in £49m expansion deal

 
Kasmira Jefford
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TESCO has bought family-friendly restaurant chain Giraffe for £49m as part of chief executive Philip Clarke’s efforts to make use of extra space in its larger supermarkets and attract customers in the face of online shopping’s rising popularity.

Britain’s largest supermarket chain announced yesterday it has taken a 100 per cent stake in the company after buying out entrepreneur Luke Johnson’s Risk Capital Partners and 3i.

The private equity group originally invested £10m in Giraffe in 2006 for a 36.8 per cent stake, which means the company has made 1.6 times its original investment.

Johnson first invested in Giraffe in 2004 when it had just seven sites in central London. It now has 48 restaurants across the UK from Aberdeen to Exeter as well as airports and train stations such as Kings Cross. It will also launch in Land Securities’ new Trinity Leeds shopping centre next week.

Russel and Juliette Joffe, the husband and wife team who founded the company in 1998 with Giraffe director Andrew Jacobs, will stay in place at the restaurant group, with Russel continuing as managing director.

Tesco’s acquisition of Giraffe comes after it recently snapped up a 49 per cent stake in coffee shop chain Harris + Hoole, which is ramping up its presence in central London.

Tesco opened the first of these coffee shops in the foyer of the Tesco Metro near London Bridge this week.

Tesco commercial director Kevin Grace said: “We have the opportunity to develop some of the space in our larger stores to create retail destinations that offer customers even more choice.”

Tesco plans to open its first Giraffe restaurant next to one of its stores near London.

PwC advised Giraffe shareholders on the sale. Nomura acted as sole financial adviser to Tesco on the deal.

THOSE WHO STUCK THEIR NECKS OUT FOR GIRAFFE

LUKE JOHNSON
RISK CAPITAL PARTNERS

RCP, founded by Luke Johnson, prides itself on backing entrepreneurs. It invested in Giraffe in 2004, when the chain had just seven sites. Patisserie Valerie and greyhound stadium owner GRA are among its successes.

SIMON BORROWS
3I

Private equity firm 3i has scored 1.6 times its original £10m investment in Giraffe, which it made in 2006. The FTSE 100 firm, led by Simon Borrows, has a wide retail and leisure portfolio that includes Agent Provocateur.