US private equity group Blackstone has emerged as a surprise contender to buy fashion chain New Look, which was put up for sale with a £2 billion price tag earlier this year. Blackstone met New Look’s management team in recent weeks and is in the process of deciding whether it should press ahead with a second round offer for the business, according to sources.
Final round bids for the business are due to be in at the end of June. The bids are expected to come in at between £1.6 billion and £1.8 billion – short of the £2 billion valuation initially put on the business.
Previously, it was thought that the only bidders remaining in the New Look auction were a consortium comprising US buyout groups TPG and Warburg Pincus, Dubai-based Landmark Group and BC Partners.
Recently, a leading Indian daily created ripples with a report highlighting Landmark’s race to buy New Look. However, people familiar with Landmark said it never made a first round bid for New Look. Landmark, which is run by Gulf-based retailer Mahesh Jagtiani, is interested in teaming up with another bidder, but is unlikely to make an offer for New Look on its own, according to sources. The group owns 3 per cent stake in New Look and is one of its franchise partners.
The emergence of Blackstone’s interest in the business comes amid speculation that New Look’s private equity owners, Permira and Apax, are also considering a refinancing of the business if they do not reach the £1.8 billion price tag they hoped to achieve. Apax and Permira appointed investment bank Merrill Lynch to sell New Look earlier in the year.
Also, there were reports that Tom Singh had taken the decision to leave New Look. Singh, who started the chain after borrowing £5,000 from his parents, wants to concentrate on emerging retail markets such as India, the report added. It was previously believed he might retain some of his 21 per cent equity stake, worth an estimated £200 million, following a deal.
– Bangalore Bureau
