Former HMV Owner Hilco Joins Race to Complete Paperchase Deal | Economic news

One of the UK’s most prolific investors has joined the race to complete the takeover of stationery retailer Paperchase.

Sky News has learned that Hilco Capital, which recently bought modern vintage brand Cath Kidston, is among a small number of parties engaged in talks over a deal with the owner of Paperchase.

City sources said Friday that talks involving Hilco are still in their early stages and may not lead to a deal.

Hilco has at various times owned some of the best-known brands in British retail, including Habitat and HMV.

He currently owns Homebase, the DIY channel.

The names of Paperchase’s other bidders were unclear.

Paperchase is up for auction 18 months after becoming one of many retail victims of COVID-19, having undergone a pre-package administration in January 2021.

Permira Credit, which has controlled the chain since then, appointed advisers to oversee a sale earlier this year following unsolicited inquiries from potential buyers.

The approaches came after an improvement in its financial and operational performance, helped by the closure of a number of stores as part of last year’s insolvency process.

Permira Credit has reportedly invested in Paperchase’s digital offering as well as opening new stores and recruiting executives since coming into contact with the administration.

PricewaterhouseCoopers, which managed the pre-packing process, oversees the sales process.

The auction comes amid deteriorating consumer confidence in the UK, with retail businesses and their owners facing a tougher environment than 12 months ago.

At the time of its insolvency contact, Paperchase employed nearly 1,300 people and traded from over 125 locations across the UK.

Its outlets included concessions at House of Fraser, Selfridges and a number of Next stores.

A person familiar with the company said in April that its digital sales had grown sharply in the 2019-2021 period, with plans to expand that presence in seven European countries through an Amazon Marketplace offering.

Its current physical fleet includes 96 stand-alone stores and 32 concessions.

Revenue is expected to double between its 2021 and 2024 fiscal years, according to the person.

Permira Credit, which is affiliated with Permira, the global private equity firm, had backed Paperchase for several years as a lender, but took a majority stake last year through a vehicle called Aspen Phoenix NewCo.

She is now looking for a long-term owner with extensive expertise in the retail industry to facilitate the growth of the chain.

Paperchase was one of dozens of high-profile retailers that went bankrupt during the COVID-19 crisis, with other notable names including Debenhams and Dorothy Perkins-to-TopShop empire Arcadia Group.

Hilco and Permira Credit declined to comment on Friday.

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