New Look purchased for 780 million

South African magnate buys 90 per cent share in the fashion retailer.

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By :  ,  Financial Analyst

Brait, the private equity vehicle of South African billionaire Christo Wiese, has bought clothing store New Look for £780 million.

The sale gives Mr Wiese a 90 per cent stake in the company. The remaining ten per cent stake is controlled by the family of Tom Singh – the man who founded the budget fashion chain in 1969.

'A hard bargain'

The business, which has expanded to include more than 800 stores in 21 countries is currently carrying around £1 billion in debt. It was sold by private equity firms Apax and Permira.

In 2004, the chain went private in a £700 million deal after the company had spent six years listed on the London stock market.

Plans to relist the company in 2010 fell through due to volatile market conditions, reports the BBC.

Retail analyst Nick Bubb told the BBC that the two private equity firms were "desperate to sell" – he says that flotation never looked likely due to the company's previous difficulties in the UK market.

Mr Bubb explained that the firm's current situation meant that Brait would have been able to "drive quite a hard bargain".

He said: "Whether New Look's recent revival can be sustained is another matter, given the surplus capacity in the UK fashion market.

Sky News reports that other bidders for the company had included a joint offer between Chinese buyout firm CDH and Claydon Dubilier & Rice. Ex-Tesco boss Sir Terry Leahy is an advisor for the latter.

Growth potential abroad

According to Brait, one of the benefits of the purchase was New Look's growth prospects abroad – particularly in China and Europe.

"It is a market-leading brand with a strong tack record of double-digit earnings growth," said chief executive John Gnodde.

Chairman Paul Mason agreed. "This is an ideal outcome for New Look. The Brait team demonstrated to us that they have the long-term vision to help Anders and the team grow this brand," he said.​

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