Silverfleet Capital sell Office for £256m to South African retailer Truworths, more than tripling its money
Office, the shoe shop, has been sold by its private equity owner Silverfleet to Truworths International, a South African fashion retailer for £256m.
Silverfleet achieved an impressive 3.4x return on its investment five years ago, in December 2010, when it bought the shoe brand from Sir Tom Hunter, the Scottish entrepreneur and philanthropist, who's behind private equity vehicle West Coast Capital.
The sale, however, has been agreed for a slightly lower figure than its recent valuation of £300m when Silverfleet was considering floating the company.
Gareth Whiley, Partner at Silverfleet Capital, told City A.M. an "IPO was very attractive from a multiple point of view about a year ago, but the timings didn't work and since then the market has cooled markedly," hence the drop in value.
However, he said: "Office has been one of the great success stories in shoe retailing and has experienced tremendous growth in a competitive space. We are delighted with our successful investment in the Company achieving a 3.4x return and wish the team every success in the future.”
He attributed the success of the investment to a "big push into multi-channel: we invested in IT, and the website grew amazingly for us, which linked back into the stores. We were very focused on building the brand range within stores, so like-for-like sales were very strong."
He described the roll-out in Germany as "an experiment that worked," but said unlike many in the retail sector Sliverfleet "didn't do roll out, roll out, roll out, and take quick short-term space for longer term pain, with higher rents. We were very measured, and focused on upgrades instead."
Total sales in the financial year to January 2015 were £270m, with online sales contributing roughly 20 per cent of revenue.
Over the past five years, the company has grown from 75 to 115 stores in Britain, and expanded to Germany, with six new shops there. It has also increased the number of in-store concessions, in Topshop, Selfridges and Hosue of Fraser, to 75.
Whiley added: "It's been a tough few years in retail, but we've been [here] for a long time. The sector is changing very fast; ecommerce has been a game changer for good or bad, and with the recession on top of it working on the consumer. We rode it very well, we focused on what modern retail looks like."
The sale will help Truworths diversify, in an attempt to counteract the weak South African Rand.
The sale is expected to complete in December 2015, subject to approval from the South African Reserve Bank, and will be effected by Truworths' subsidiary that is resident in the UK.
Rothschild and JP Morgan advised Silverfleet, along with PwC and law firm Travers Smith.