High street chain Poundworld sells majority stake to US investors

TPG’s investment in Poundworld will be used to fuel store expansion and investment infinance new distribution facilities.

A former market stall trader and his family will bank more than £75m after selling a majority stake in their Poundworld store chain to US private equity firm TPG.

The business, which Chris Edwards founded at a Wakefield market in 1974, is valued at £150m under the deal which comes as investors battle for a slice of the fast-growing “value” market. The family opened their first high street store in 2004.

Until Thursday, Edwards co-owned Poundworld together with his son Chris Junior and brother Laurence. Together they built the chain into the UK’s second-largest single price retailer behind Poundland. The group, which also owns the Bargain Buys chain, made a profit of £6m in the year to the end of March 2014, nearly double that of a year before. Sales rose 18% to £345m according to accounts filed at Companies House. 

“I began this business as a market trader and we now have millions of customers from all corners of the nation and all walks of life. Still, there is so much more for us to achieve,” Edwards said.

Poundworld has benefited from shoppers’ love of a bargain,a trend which gained momentum during the economic downturn. Low-price chains including Poundland and Poundstretcher have been growing rapidly alongside grocery discounters Aldi and Lidl and low-price household goods chains including B&M and Home Bargains.

Traditional supermarkets, such as Tesco, Asda and Morrisons, have suffered as people visit more stores to purchase cheaper toiletries, snacks and even gardening goods.

TPG’s investment will be used to fuel store expansion and finance new distribution facilities. The operational centre of Poundworld, which employs more than 6,000 people and serves 2 million customers a week, will remain in Normanton, West Yorkshire.

Abel Halpern, a partner at TPG, said: “We see the continuing rise and evolution of the value retailer as an exciting change in the UK retail landscape.”

The consumer trend for bargain buys has kicked off a frenzy of activity in the City.

Poundworld’s deal with TPG, which previously co-owned Debenhams, follows Poundland’s £55m bid for rival 99p stores, which is currently facing an investigation by the UK’s competition watchdog. 

Poundland itself launched on the stock market last spring at a value of £750m just a few months before B&M joined the market at a heady valuation of £2.7bn.

Halpern said: “Poundworld has succeeded in building one of the leading positions in the market with a focus on consumer preference, convenience and value. With our financial backing and retail experience, combined with Poundworld’s entrepreneurial dynamism and strong brand, the business is now well positioned for continued growth.”

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Posted on May 15, 2015, in #retail, #uk. Bookmark the permalink. Leave a comment.

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