The price of clothes has both tumbled and soared over the last few decades. Haute couture became the preserve of the wealthy while discounters like Primark and Walmart have slashed the cost of basics. Carving out a profitable womenswear niche between these two extremes is challenging as consumers are faced with a huge array of choices. And it was in this environment that private equity firm L Capital, and French private lender Tikehau Investment Management made a bet on ba&sh, a fast-growing French womenswear retailer.
In April, Tikehau IM provided a €30 million unitranche facility to back L Capital’s acquisition of a 50 percent stake in ba&sh, says Jean-Baptiste Feat, co-head of private debt who led the deal for the firm.
L Capital had been watching the progress of ba&sh for almost four years before it approached the founders about a potential LBO, Velasco explains. Between 2009 and 2014 it grew from 10 stores to 65 outlets while also pushing into the digital market and signing a distribution agreement with ASOS, one of the UK’s largest online womenswear retailers.
THE RIGHT FIT
L Capital spoke to other lenders as well as Tikehau, both Velasco and Feat confirm. But for Velasco, Tikehau was the right lender for a number of reasons not least because it does not shy away from retail like some others. “The perception of some lenders about retail might sometimes not be the best, but there are many success stories to be done,” says Velasco.
While the French market has some fans, it’s also had many detractors in the period since the global financial crisis. France’s banking sector was badly hit by Greece, short-term money market withdrawals and the impact of new regulation. And though it picked up in the first quarter of this year, annualised rates of growth in French gross domestic product have been under one percent for the last two years.
For both Feat and Velasco, the relationship between Tikehau and L Capital was also important. L Capital has previously worked with Tikehau and is confident that it understands retail in the same way that the private equity house itself does, says Velasco.