As ‘for sale’ sign is raised over Homebase who might be potential buyers?

After two and a half years under the ownership of turnaround specialist Hilco, Homebase is seeking new owners to drive the next stage of its growth strategy. 

Bought for just £1 in 2018 after a disastrous period under the ownership of Australian retailer Wesfarmers, Hilco’s tenure has brought the home enhancement business back into the black.

Industry observers believe trade buyers are unlikely to take much interest in Homebase, so a private equity deal is most likely.

Retail Week spotlights some of the top private equity names likely to be running their slide-rules over the retailer.

Lone Star

Lone Star Funds dropped out of the race to buy Asda from Walmart earlier this year after reports that it could not justify the £6.5bn price tag.

However, it’s not as if cash is a problem for the private equity house, so it might see merit in a different venture.

While a value for Homebase has yet to be agreed, Lone Star would presumably be able to snap it up for far less, based on the £340m Wesfarmers paid back in 2016. 

Apollo

Another party interested in the Asda takeover deal, Apollo may also be looking for an alternative retail acquisition. 

The US firm hired retail veteran and former Debenhams boss Rob Templeman to help with the deal, who could equally be well-placed to aid in a Homebase bid.

Templeman led Homebase from 2001 to 2003, seeing it through both a £750m sale to Permira and the subsequent £900m sale to then Argos owner GUS retail group a year later.

It was thought that he would take on the role of chair if Apollo won the Asda bid, so a similar arrangement could be made here with his experience at the retailer as a bonus.

While Homebase has returned to profitability under Hilco, Apollo could also bring the DIY retailer to the next level with its specialism in creativity and operational improvements.

Permira

Permira previously invested in Homebase back in 2001, purchasing the retailer for £750m and making a swift profit a year later.

The private equity firm was credited with restructuring the DIY specialist, boosting its profits amid an economic slump.

It has held a host of retail companies over the years, including New Look and Hugo Boss, while it currently has stakes in Dr Martens and buy-now, pay-later financial services company Klarna. 

Permira expressed interest in buying Gymshark earlier this year, so may be looking for another retail investment on a growth trajectory.

Meditor

Meditor took over flooring specialist Carpetright in December 2019 for a cut-price £15m and FlooringSupplies.co.uk earlier this year for an undisclosed sum.

It has clearly shown willing to invest in difficult situations, rescuing Carpetright from a significant debt pile after it undertook a company voluntary arrangement in 2018, resulting in the closure of 80 stores.

The British hedge fund has said it is keen to do more deals in the sector with cash to spare, making Homebase an attractive opportunity to branch out into new adjacent categories.

Stonebridge

Stonebridge recently acquired struggling menswear business TM Lewin through its subsidiary Torque Brands, so it has certainly shown interest in bricks-and-mortar retail. 

Its team includes Hilco co-founder Robert Schneiderman and Hilco former chair, chief executive and co-founder Paul Taylor, both of whom have extensive experience in the retail industry and would potentially be willing to deal with their old firm.

Retail veteran Allan Leighton, who has previously held top roles at Asda, Pandora and Selfridges, also sits on Stonebridge’s advisory board and could provide great insight for the group.

Stonebridge has a particular focus on “technology-enabled investments within the consumer sector”.

While Homebase is just beginning to make headway with its digital growth through a 10-year partnership with The Hut Group, the new focus could bring interest from this private equity firm.