May 7, 2013

Warburg Pincus mulls over sale of Poundland for £600m

US-based private equity group Warburg Pincus is mulling over the sale of Poundland, a budget retail chain in the UK, for around £600m.

By admin-demo

US-based private equity group Warburg Pincus is mulling over the sale of Poundland, a budget retail chain in the UK, for around £600m.

The equity owner has acquired the chain in 2010 from private equity outfit Advent International for £200m.

The company is said to be seeking various options to offload the stake in the chain including straight out sale and flotation by 2014.

It is also looking at a possible auction to leverage upon the strong performance of the retail chain.

Sales of the retailer are surging amidst growing demand from hard-pressed consumers for bargain products such as batteries, milk, chocolates and detergents in the downturn.

The chain reported profits of £40.1m in the year to April 2012, a rise of 26.5% year-on-year, alongside a turnover of £780m.

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The sale of Poundland is in line with company’s strategy aimed at raising $12bn to fund anonymous buyout deal.

Warburg Pincus, along with its partner, is also planning to divest its stake in luxury specialty department store chain Neiman Marcus for $8bn.

Poundland, meanwhile, plans to open 60 outlets per year to account a total store count of 1,000 by the end of next ten years.

The group, founded by Dave Dodd and Stephen Smith in 1990, currently operates 450 outlets across the UK.