Retail set for a boost

The number of secondary or orphan brands in 2004 is predicted to boost private equity activity in the retail and branded goods sector, according to Retail and Branded Good Insights 2003, a report by the corporate finance team at PricewaterhouseCoopers.

The report attributes this growth to an increase in acquisition opportunities from so-called fast moving consumer goods companies, which have developed “superbrands” and want to sell off their secondary brands.

Clothing and footwear is predicted to account for the largest number of deals within the retail sector. This is being driven by the number of clothing businesses still owned by their original founders who are in need of new management and further capital.

Stuart McKee, retail sector partner at PricewaterhouseCoopers Corporate Finance, said: “The retail sector has been a hotbed of rumour and speculation during 2003. However many deals have yet to complete and M&A volume figures for 2003 are likely to be well down on the full year figure of 2002. Private equity houses and hybrid investment vehicles will be the likely beneficiaries in 2004 as large companies sell off secondary brands. Based on our current assessment of the market, we forecast a potential increase of 30-50% in such activity in 2004.”

Retail transactions

Value (£m) % of total No of deals

Corporate acquirers 923.7 36.3 31

Private equity – MBOs & development capital 244.2 9.6 5

Private individuals 1,379.6 54.2 7

Source: PwC