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EWM doubles Rutland’s investment

Bank of Scotland Corporate Banking has acquired Rutland Fund Management’s stake in EWM Group via a secondary buyout worth GBP67.5 million. The bank has provided an integrated package of debt and equity to back chief executive Philip Day’s buyout of the retail chain. The current management team will continue to develop the business, which operates The Edinburgh Woollen Mill stores.

Rutland acquired the business last year for GBP49 million from Grampian Holdings as part of a larger deal including the disposal of 24 EWM properties to a separate buyer.

Grampian, which changed its name to Malcom Group in January, sold the chain to focus on its transport business. In May 2002 a bank refinancing meant Rutland received GBP12.3 million in partial repayment of its original investment, bringing the total exit value to around GBP80 million. Paul Cartwright, the director of Rutland who led the investment, said the fund had doubled its GBP22.5 million investment in 18 months.

In August EWM appointed Day, formerly the joint deputy managing director of Aquascutum, to replace former CEO Colin Birrell who resigned on completion of the original sale. The investor also implemented changes within the business including improvements to the supply chain management, financial controls and distribution, investment in new warehousing and the introduction of the EWM brand. The company reported improved performance in the year to January 2002, with operating profit up to GBP15.5 million from GBP10.5 million in 2001.

EWM owns the UK retail chain, The Edinburgh Woollen Mill, which has 285 outlets split between high street sites targeting the mature shopper and individually branded tourist shops. The company’s products include classic Scottish knitwear, tartans, accessories and gifts.

The investment in EWM is typical of the GBP210 million Rutland Fund, which focuses on companies with mature products or services that are facing strategic challenges, commercial or financial difficulties or that are in need or restructuring. The fund closed last March and has made four investments; this is the first exit. Rutland Trust is one of the investors in the fund and realised a total return of GBP20.2 million compared with an original investment of GBP10.7 million.