Change backs £105 secondary buy-out of Republic from 3i

Target: Republic - Tim Whitworth, Carl Brewins

Change Capital Partners - Steve Petrow

Ingram Forrest Corporate Finance - Tim Simpson, Ian Hale, James Stones

SJ Berwin - Graham Nicholson

Deloitte  - David Bellrod

Lloyds TSB - Marc Blower, Noel Stubley

Vendor 3i - Peter Yendell

Hawkpoint

Addleshaw Goddard

PricewaterhouseCoopers

Change Capital Partners has backed a buy-out of UK fashion retailer Republic in a deal valued at £105m (€153m). It acquired the business from 3i, which achieved a return of 2.2 times its investment and an IRR of 80 per cent. 

Republic operates 76 stores across the UK and sells young adults brands such as G-Star, Replay and Hooch as well as some of its own labels. 3i invested £1.5m in the business in February 2004 for a minority stake, believed to be around 18 per cent. The firm also introduced Richard Tonks to the business as chairman. Since the investment, Republic has opened 35 new stores and has doubled profits.

“We exited a little earlier than expected, “ said 3i’s Peter Yendell. “But the deal was prompted by the fact the finance director was looking to retire. We decided to look at where the business wanted to go and together with management, decided that a sale was the best option.”

He said there were a number of buyers interested in the business and that these were primarily private equity firms.

The Change Capital Partners deal includes £55m of debt from Lloyds TSB and sees chief executive Tim Whitworth and buying director Carl Brewins reinvest in the business. Change will take an undisclosed majority stake. 

“Republic has had an impressive story to date.” said Change’s Roger Holmes. “It has had a high level of sales per square foot and sells both external brands and its own brands. We particularly liked the fact that it offers its customer a range of price points – you can buy jeans there from £25 to £125. The range of brands it offers also helps insulate the business from fashion risk.” 

Republic intends to roll out further stores over the coming years and will increase the size of its outlets from around 2,000 square foot  currently to around 6,500 to 7,500 square foot. “We are hoping to be in the top 200 UK shopping centres and are planning to open between 10 and 20 new stores a year.” said Holmes. They will be funded from cash generated by the business, he added.