Private equity firm 3i has exited from its minority stake in UK fashion retailer Republic. 3i sold its stake, thought to be around 17%, as part of a £105m deal that sees Change become the majority shareholder in Republic.
The deal is among just a handful of fashion retail transactions on the UK high street this year. Buyers for companies, like buyers for products, have been thinner on the ground than in recent years.
Republic has bucked this general trend, however. According to its backers, the 79-store chain has almost doubled its profits in the past year despite the difficult retail climate. Growth has been through expansion and investment rather than stronger trading. The company has opened more than 35 new stores since 3i came on board.
For 3i, the exit represents a money multiple of 2.2x and an IRR of 80% on the firm’s investment. 3i paid around £15m for its stake in Republic in February 2004. The company sells contemporary men’s and women’s fashion wear.
It remains to be seen whether Change Capital, the retail focused private equity firm set up by former Marks and Spencer chairman Luc Vandevelde, will continue with such an aggressive expansion programme or will look to build up revenues within the chain’s current operations.