Liberty's biggest shareholder sells its stake in £300m deal

BlueGem Capital has exited its Liberty London stake with the sale of a majority holding in the business in a deal worth around £300 million. 


Liberty's biggest shareholder has sold its stake


The new shareholders are a private equity consortium led by Glendower Capital. But they won’t control the company with BlueGem’s stake having added up to only 40%. Other investors, including BlueGem founder Marco Capello, are retaining their stakes with Capello also staying on as non-executive chairman.

CEO Adil Mehboob-Khan, the former Luxottica exec who only took up his role last year, will continue in his post too.

The 144-year-old business is best known for its landmark department store just off Regent Street in London, but it also has a thriving wholesale fabrics operation and wholesales its own brand fashion and accessories too.

BlueGem paid £32 million for its controlling Liberty stake back in 2010 and refinanced it in 2014 when the holding was reduced to 40%. It has made a healthy return on its investment, with sources telling the FT that BlueGem’s total return over the years should add up to around 12 times its original investment. That’s good news for the group considering how troublesome another investment, Jack Wills, is for it at the moment.

But it’s not all about what BlueGem is taking out as it has invested heavily in Liberty since it came on board and this has helped boost its fortunes, turning it from losses to profits. The company’s sales rose 8% to £133 million in the latest year for which we have information (the 12 months to February 2018) with Ebitda of £21 million and pre-tax profits surging to almost £7 million. Reports said Ebitda for the year to February 2019 should be around 20% higher. Ten years ago, however, Liberty’s sales were close to half of that £133 million figure (around £70 million) and it lost £4.5 million.

A big chunk of its profits today come from sales of own-brand products, an income stream that has grown during the BlueGem years. Earlier in 2019, Liberty launched own-brand nightwear and swimwear for retail and wholesale and last month it held its first ever runway show to unveil its new retail/wholesale high-end womenswear offer. This week it also revealed its new Liberty Fabrics B2B platform so it's clear that the own-brand strategy has further to run. The Fabrics operation has reportedly quadrupled its sales under BlueGem.

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