Leonard Green & Partners could soon own a retail giant.
The Los-Angeles based private equity firm is close to acquiring Nordstrom in a take-private deal, according to CNBC. LGP would reportedly devote some $1 billion of its own capital, while Nordstrom is said to be in discussions with banks about raising between $7 billion and $8 billion in debt to finance the rest of the transaction.
The report comes after the company's board of directors announced in June it would form a committee to explore a sale. While another bidder could still materialize, LGP appears to have emerged as the Nordstrom family's favored partner over competition from PE heavyweights KKR and Apollo Global Management, per CNBC.
The LF Brook Absolute Return Fund lost -2.52% in the second quarter of 2021, compared to a positive performance of 7.59% for its benchmark, the MSCI Daily TR Net World Index. Year-to-date the fund has returned 4.6% compared to 11.9% for its benchmark. Q2 2021 hedge fund letters, conferences and more According to a copy Read More
It hasn't been an easy year for the PE-backed retail companies, as Gymboree, Payless and others have filed for bankruptcy. More bad news came last week, when reports surfaced that toy retailer Toys R Us has hired Kirkland & Ellis to help restructure the company's massive debt load, with bankruptcy looming as a possibility. There were 33 PE-backed distressed exits in the global retail industry last year, according to the PitchBook Platform, the highest total since 2009, in the immediate aftermath of the financial crisis.
And at the same time, new investments are dwindling. The number of PE deals for US retail companies has dipped significantly so far in 2017, with 48 deals after 110 such transactions last year, per PitchBook data:
But Nordstrom has avoided some of the woes plaguing the rest of the retail industry with its popular Nordstrom Rack stores and a strong ecommerce platform. The company's stock shot up almost 9% in after-hours trading. Adding more optimism: the Nordstrom family ownership group, which currently owns a little more than 31% of the company's stock, would reportedly retain control of department store operations upon the completion of a buyout.
Check out our previous coverage of PE dealings in the retail industry.
Article by Adam Lewis, PitchBook