Investcorp Wears Out Its Carters

In today’s murky exit environment, where private equity firms are loathe to take anything not related to the health-care and energy sectors, sales are becoming one of the only viable options. So when Investcorp recently wanted to exit baby and toddler apparel retailer The William Carter Co., it put the company on the block and found a suitor in Boston-based Berkshire Partners for $450 million. Berkshire’s equity commitment will total approximately $130 million.

Besides its strong brand name and management team, the company fits well with Berkshire’s investment strategy of investing between $20 million to $200 million of equity per deal, said Jeanine Neuman, a director of client services at Bershire Partners.

Berkshire has a penchant for investing in the retailing sector, as its portfolio includes: Gordon Brothers Group LLC, an advisory firm that assists retailers with asset redeployment; Waterworks, a retailer of luxury bath products; and Savers Inc., a retailer of secondhand merchandise.

Investcorp and management had originally acquired William Carter in October, 1996 for $208 million. Chase Manhattan Bank led the senior debt financing in the amount of $56.1 million and $90 million of subordinated debt was provided by Bankers Trust Co.

“We owned this company for four-and-a-half years and it was a very successful investment for us,” said Christopher O’Brien, a member of Investcorp’s management committee. O’Brien said the firm always looks for multiple exit opportunities in every investment and “in today’s marketplace, a financial buyer was the most viable exit.”

Through a “very competitive process with some very high quality bidders involved” Berkshire Partners won out because they “know the retail and apparel business very well” and “they paid the highest price,” O’Brien said. “It wouldn’t surprise me if in a couple of years you see the company go public,” he added.

Morrow, Ga.-based William Carter Co. markets its brand names of Carter’s and Carter’s Classics to department stores and through its own retail outlets. The company had net sales revenue of $471.4 million last year. – H.T.