One of Asda’s owners has valued its stake in the supermarket at almost 20 times the sum it paid in a blockbuster takeover last year.
According to The Financial Times, private equity firm TDR Capital informed investors it has placed its stake at 19.8 times the orginial investment in the grocer.
The US firm, alongside the billionaire Issa brothers, were reported to have used just a slim amount of their own funds in the £6.8bn deal, something which is atypical in these types of deals.
The takeover team funded the remainder of the acquisition by stacking debt on Asda and selling off some of its assets.
According to documents seen by the Financial Times, the stake is now valued at €1.7bn (£1.4bn), with an implication TDR’s initial funding was in the realm of tens of millions of euros.
Figures from Bain & Co. reveal that private equity takeovers of consumer businesses made on average 1.8 times their money between 2009 and 2021.
In total, the Issa brothers and TDR funded less than £800m of equity for the £6.8bn deal, a lower figure than the average buyout.
What’s more, documents produced by TDR were reported to imply that most of its €334mn contribution came from EG Group, a petrol forecourt operator, owned by TDR and the Issas.
Speaking to the FT, TDR said it “makes regular reports to our investors on the performance of our investment portfolio.”
“These are made in accordance with established and consistent valuation metrics including but not limited to comparable transactions and public market comparisons,” the firm added.