Irish fund steps in to rescue Patisserie Valerie coffee outlets
Causeway Capital, an Irish-based equity fund, has bought out the Patisserie Valerie coffee-and-cake chain from British administrators, showing its faith in troubled UK retailing.
The deal involves 96 of around 125 outlets held by the main business in Britain and the North, at a fraction of the £500m (€570m) stock market investors had put on the chain before it plunged into crisis in October after its owner uncovered accounting irregularities. It hired KPMG as administrators in a last-ditch attempt to save the company.
The deal saves around 2,000 jobs across the main chain but doesn’t include other businesses or outlets in Dublin. Patisserie Holdings ran a total of around 200 outlets, employing about 2,500 people.
Causeway Capital is best known for its investment in Celtic Linen but this latest purchase following a previous investment in the 60 outlets of Bakers+Baristas is a vote of confidence in the crowded UK coffee business.
Earlier this week, British retail tycoon Mike Ashley’s Sports Direct — who also owns the Heatons department stores in Ireland — withdrew an offer of more than £15m to buy Patisserie out of administration.
KPMG partner David Costley-Wood had told the company it would need to raise its offer by as much as £2m, the Financial Times reported at that stage. “This looks like good news for Patisserie Valerie and its staff, though the jury is still out on how many outlets might actually be saved, as negotiating with landlords may prove tricky,” Laith Khalaf, senior analyst at brokerage Hargreaves Lansdown, said.
“The high street is still a tough place to do business right now, and Patisserie Valerie will have to work extra hard because it’s also reeling from the recent accounting scandal,” he said.
Matt Scaife at Causeway Capital said that the investment in “the heritage brand” means “the end of a turbulent period for customers and suppliers alike”.
