Baring Private Equity Asia said it has acquired a stake in the UK's Cath Kidston, the latest private equity firm to see opportunities in helping western brands expand in Asia.
Baring Asia bought the shares in the clothing to home furnishings retailer famous for its chintzy fabrics from another private equity firm, US-based TA Associates, and from the company’s management.
“With strong underlying trends in consumer demand across Asia, we look forward to further developing the brand across the region”, said Dar Chen, a managing director at Baring Asia.
Western brands are keen to sell to Asia’s emerging affluent class but often struggle with local regulations and making the right connections. Firms such as Baring Asia, which has been investing in Asia since 1997, are looking to bridge the divide.
Other private equity firms are also jumping into the opening. China’s Hony Capital acquired Pizza Express earlier this month and plans to smooth the way for the British firm to open more stores across China. Chinese strategics are also snapping up western brands, such as Sanpower's acquisition of department store House of Fraser.
Cath Kidston founded her eponymous store in 1993 in London’s Holland Park. The company now has stores in China, France, Hong Kong, Indonesia, Japan, Korea, Malaysia, Singapore, Spain, Taiwan, Thailand and the UK.
Cath Kidston is not without her own connections in Asia as she is a scion of the Swire family which controls a number of Hong Kong-listed companies via John Swire & Sons trading house. Swire Resources distributes Cath Kidston products in Hong Kong.
Cath Kidston sold some of her 20%-plus stake in the company to Baring Asia but remains a substantial shareholder and the creative director, said a person familiar with the matter.
In July 2014, Cath Kidston opened its 100th overseas store in Seoul, bringing the total number of stores to 166.
Cath Kidston’s sales hit £116 million in the year ending March 30, up 10% from a year earlier, with ebitda rising 19% to £25 million over the same period. International retail sales increased 37% to £46 million.
TA Associates owned a 65% stake in Cath Kidston prior to the transaction. Baring Asia will have equal ownership with TA.
Baring Asia did not disclose how much it was paying or the exact size of its stake.
UBS acted as exclusive financial advisor to TA Associates and Cath Kidston on the transaction. UBS was hired late last year to look at strategic options. The sale attracted a lot of interest from around the world, according to the person familiar with the matter.