Brait, the investment firm controlled by South African billionaire Christo Wiese, has agreed to pay £780m for a 90% stake in the UK fashion retailer New Look. The deal marks the company's second major foray into the British market in a month, following its £682m purchase of Sir Richard Branson's 80% stake in Virgin Active.
New Look, founded in 1969 in Taunton, Somerset, operates 569 stores in the UK and a further 200 across Europe, China, Africa, the Middle East and Asia. Founder Tom Singh, who owns 22% of the business, will cash in most of his holding but retain a stake. The deal values New Look at £1.9bn including debt.
New Look's UK performance has been mixed, with store closures offset by expansion in China and Poland. In the final three months of 2014, sales excluding store openings and closures fell 1%, although online sales rose by a third. Chief executive Anders Kristiansen, who will remain in his role, said Brait supported his strategy of international expansion, increased online sales, and the development of new lines such as cosmetics and menswear.
Kristiansen said Brait offered stability and a long-term perspective. He noted that Brait had bought into the strategy started two years ago and wanted the company to move faster. New Look had previously considered an initial public offering and aimed to open more than 50 additional stores in China by April 2016. The retailer also withdrew from Russia last year and sold its French budget chain Mim.
Retail analyst Nick Bubb said the private equity owners, Apax and Permira, had been eager to sell after 11 years, and that an IPO had never looked feasible given New Look's chequered UK history and unproven Chinese potential. The acquisition will put New Look in direct competition with Pep & Co, a separate fashion venture backed by Wiese and due to launch shortly.
Wiese, 73, built a fortune estimated at $7bn through investments in retailers including Shoprite and Pepkor, which operates 3,700 clothing stores worldwide. The son of a petrol station owner and farmer from the Northern Cape, he trained as a lawyer before joining Pep Stores, co-founded by his parents. His other interests include mining, a game reserve, and a vineyard.
