JD Sports has snapped up fashion chain Bank from Phoenix Equity Partners; Baugur may take a much-anticipated pop at Moss Bros; and sale talks between Carpetright and founder Lord Harris continue.
But these transactions would only be a ripple in the waters, rather than a turning of the tide. JD is paying£18.5 million for Bank and a Moss Bros takeover would only set Baugur back about£40 million.
At a valuation of£850 million, a Carpetright deal would be more substantial, but still would not come close to the megadeals of the past few years – most notably the£11.1 billion sale of Alliance Boots.
As market turmoil continues – reflected in emergency fundraising and rolling heads at the banking giants – it looks as if it will still be some time before the private equity high rollers can once again cruise the high street flashing their cash.
In the absence of their attention, it’s interesting to ponder whether retail will whet the appetites of the new financial kids on the block – the sovereign wealth funds of the Middle and Far East.
They’ve been active lately. The sub-prime crisis over here has led to a flow of cash – at suitably high rates – from further afield.
The Government of Singapore Investment Corporation is providing half of the US$17 billion (£8.31 billion) capital needed by UBS and can convert its notes into shares. Similarly, the Abu Dhabi Investment Authority is providing Citi with US$7.5 billion (£3.66 billion).
Sainsbury’s has attracted the interest of such groups already. Qatari royal family money was behind Delta Two’s abortive bid for the grocer, so more offers of a similar nature could materialise.
But only the biggest retail trophies are likely to feature on the wish lists of the sovereign funds, which limits the potential for deals. And the funds’ interest so far has focused on business sectors such as infrastructure and banks, indicating stores are lower on their the agenda.
The truth is that transactions such as Bank and Moss could be expected whether general market conditions were good or bad – they are part of corporate life. They do not represent a new phase of deal-making and Alliance Boots is likely to remain the high water mark for a while yet.
George MacDonald is deputy editor of Retail Week
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