PE investors recognise the growth in the discount retail sector and snap up a pre-Christmas bargain

It’s well documented that the retail sector is having a particularly difficult time, and it seems that not a month passes without news of another household chain appointing the administrators.  However, one section of retailers continues to show significant growth in sales and now appears to have hit the radar screens of private equity and financial investors. 

Retailers who specialise in heavily discounted products are seeing more and more consumers turn to them as household incomes continue to be squeezed, and within the space of the last seven months four Europe-based discount retail specialists have found themselves attracting investment from financial sponsors.

Yesterday brought news of the first such investment into a British low-cost retailer as Clayton Dublier & Rice (CD&R), the US-based private equity firm, announced it is acquiring an undisclosed majority stake in B&M Bargain Stores from the current shareholders, the Arora family.

Sir Terry Leahy, the former chief executive of Tesco, will serve as chairman of the board, with CD&R no doubt hoping he can recreate just a small fraction of the success he was able to bring to Tesco in his time there, in order to maintain the phenomenal growth that B&M has charted since being bought by the Arora family in 2005 from Phildrew Ventures.

It remains to be seen if there are more retail companies out there that are such good pre-Christmas bargains.

Filed under: private equity, retail, UK, M&A Deals