While many investors are bemoaning HMV’s performance on its first day of trading, with shares falling 8 pence, shareholder Advent International is celebrating a partial exit from the group with a 100 per cent return on its investment. The firm is optimistic with regards to the group’s future and retains a 9 per cent shareholding.
HMV has raised £375 million, the largest retail IPO in London for over a year. It will use the proceeds to pay off debt and return cash to its shareholders. Advent originally invested in the group when it set up HMV Media Group as a joint venture with EMI Group in March 1998. The group acquired Waterstone’s, the UK bookseller from WH Smith for £300 million and acquired HMV Group comprising music retailer HMV and Dillon’s, the UK book retailer for £ 500 million.
HMV Media Group put in place £500 million of senior debt facilities underwritten by Merrill Lynch and SBC Warburg Dillon Read. EMI agreed to provide a £200 million bridging loan and Advent led the equity investment of £87.5 million.