Carlyle Orchestrates £150 Million Refinancing for Very Group
US private equity behemoth Carlyle has successfully arranged a substantial £150 million funding package for the debt-laden Very Group, the prominent online retailer that owns both the Very and Littlewoods brands. This strategic financial maneuver comes as Carlyle prepares to potentially sell the retail giant for an estimated £2 billion valuation.
Extending Credit and Converting Debt to Equity
The comprehensive refinancing deal involves both the extension and renewal of Very Group's crucial credit lines, with Carlyle confirming that this arrangement secures the company's long-term funding stability through 2029. In a significant restructuring move, millions of pounds worth of existing credit have been converted into equity ownership stakes. This conversion is specifically designed to alleviate the financial pressure on Very Group from burdensome interest payments.
Very Group has announced that the newly implemented financial structure operates with a lower interest rate compared to the previous credit arrangements. This reduction in borrowing costs provides the retailer with improved financial flexibility and reduced debt service obligations moving forward.
From Lender to Controller to Potential Seller
Carlyle's relationship with Very Group has evolved significantly over recent years. The private equity firm initially served as one of the retailer's largest lenders before ultimately seizing control of the business in November as part of the high-profile dismantling of the Barclay family's extensive business empire. The Barclay family had maintained ownership of Very Group for approximately two decades prior to this transition.
When Carlyle assumed control last year, the firm emphasized that the transaction would provide Very Group with "a strengthened capital base and enhanced flexibility," while committing to increased "investment in technology and customer experience." However, just months after taking the reins, Carlyle has initiated a formal sale process for the online retailer.
Sale Process and Financial History
Barclays and JP Morgan have been appointed to manage the auction of Very Group, which generates impressive annual revenues exceeding £2 billion. The company is chaired by Nadhim Zahawi, the Reform UK politician who originally founded the YouGov polling company.
Carlyle's financial support for Very Group extends back several years. The New York-listed investment giant first injected hundreds of millions of pounds into the retailer's coffers in 2021 to help navigate the challenges of the coronavirus pandemic. This was followed by an additional £85 million infusion three years later. These successive financial injections ultimately paved the way for Carlyle's eventual takeover of the group last year.
The Barclay family's decision to relinquish control of Very Group and other flagship assets including The Telegraph newspaper and the Ritz Hotel came amid substantial unpaid debts exceeding £1 billion across their business empire.
Management Perspective and Future Outlook
Edward Fry, Chief Financial Officer at The Very Group, commented on the refinancing achievement: "Securing this long-term funding reflects the confidence of our lenders in the strength of our business. The combination of extended maturities, improved margins and further deleveraging provides a stable platform for continued investment in our digital and customer proposition, while maintaining a disciplined approach to balance sheet management."
Carlyle's diverse European investment portfolio includes trading platform Calastone and designer trainer brand Golden Goose, alongside its now-controlling position in Very Group. The £150 million refinancing represents a crucial stabilization measure as the private equity firm positions the online retailer for a potential sale that could reach the £2 billion valuation target.
