Backgrounder Creating leading world retailers: TPG and Newbridge Capital
Texas Pacific Group (TPG) and its Asian Pacific investment arm Newbridge Capital (Newbridge) have been investing in and building retail franchises for more than a decade, with TPG focused primarily on the U.S. and Europe and Newbridge focused on Asia, India and Australia. Together, these affiliated firms have invested in retail properties with enterprise values of nearly US$10 billion. In the retail sector, Newbridge and TPG pursue investments in well-known brands that appeal to demographics ranging from middle market to luxury and with stores of varying sizes and geographic locations. Often Newbridge and TPG invest with the strategy of turning under-performing retailers with a strong underlying franchise into leaders in their sector. A list and description of selected portfolio companies follows.
The Neiman Marcus Group Operating through Neiman Marcus Stores, Bergdorf Goodman and NM Direct, which includes the Horchow brand, the Neiman Marcus Group is a high-end specialty retailer that focuses on serving the unique needs of the luxury market. Since the Company’s founding, it has established itself as a leading fashion authority among luxury consumers and has become a premier U.S. retail channel for many of the world’s most exclusive designers. Currently, the Neiman Marcus Group operates 36 Neiman Marcus full-line stores at prime retail locations in major U.S. markets, 18 Last Call clearance centers and two Bergdorf Goodman stores on Fifth Avenue in New York City. These store operations total more than five million gross square feet and generate US$3.8 billion (A$5.2 billion) in sales. ♦ For nearly a century, Neiman Marcus has been one of the leading luxury retailers in the United States, offering distinctive high-end women’s and men’s fashion apparel and merchandise complemented by superior customer service that caters to the needs of the affluent consumer. ♦ Standing at the crossroads of fashion at Fifth Avenue and 58th Street in New York City, Bergdorf Goodman is known throughout the world for elegance, luxury, and superior service. ♦ Horchow offers quality home furnishings, linens, decorative accessories and tabletop items. ♦ Neiman Marcus Direct, the Group’s direct-to-consumer business, conducts both print catalog and online operations under the Neiman Marcus, Horchow and Bergdorf Goodman brand names. The Company also owns majority interests in Kate Spade LLC, a designer and retailer of high-end accessories, and Gurwitch Products LLC, which designs and markets Laura Mercier cosmetics. www.neimanmarcusgroup.com.
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Debenhams is the leading mid-market department store in the United Kingdom. With a deep commitment to offering customers greater value, excellent service and a wider choice, Debenhams offers a unique mix of exclusive brands, including 'Designers at Debenhams,' international brands and concessions. Although Debenhams’ roots date back to 1778, the first Debenhams department store was opened in 1905. As the number two UK department store owner by store count, Debenhams operates 120 stores in the UK and the Republic of Ireland. Debenhams also has 21 overseas franchise stores. With sales of £1.6 billion (A$3.8 billion), Debenhams ranks as the UK’s number three department store by sales. In December 2003, Debenhams was acquired by a consortium including Texas Pacific Group. Since then, Debenhams has significantly grown revenue and profitability by leveraging brand equity and by differentiating through growing exclusive designer concepts and by improving marketing and visual merchandising. Debenhams also offers the latest in customer shopping options with a fully transactional website. www.debenhams.com
J.Crew is a leading producer of men’s and women’s clothing and accessories focused on classic, timeless, sophisticated American style. The company set the industry standard for quality, design, and style by using the finest fabrics, craftsmen, and mills throughout Europe and the U.S. Initially one of the pioneers in catalog retailing in the U.S., J.Crew has grown from opening its first store in the New York City in 1989 to operating 161 retail stores and 44 factory outlets today, with more openings planned in 2006. In 1996, J.Crew launched its website www.jcrew.com that offers an unparalled online shopping experience with deeper assortments, colors and size ranges. J.Crew continues to exceed the expectations of its shoppers through high quality, excellent service and iconic styles at fair prices. www.jcrew.com
Bally is the well-known global luxury leather goods producer famous for its shoes and accessories. Once seen as losing its edge in the hot luxury goods market, today Bally’s business continues to strengthen. In 2005. Bally’s global sales were up between 15 percent and 20 percent, thanks to increased efficiencies, a more edited product line and a more cohesive global brand image. In 2006, the company will continue to roll out its new advertising campaign, intended to match the intensity of other global luxury retailers, as it continues to enhance its global presence. With approximately 200 single-brand stores around the world, Bally’s newly developed store concept can be seen at its recently revamped flagship store in New York. The luxury retailer’s operations are based in Calsano on Switzerland’s Lake Lugano. www.bally.com
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Founded in Italy by the Ducati family in 1926, Ducati has developed into a world-famous, high-performance sports motorcycle brand. Its products are available at dealerships across Europe, Asia, Africa, the Middle East, the Pacific and North, South and Central America, including 32 dealers in Australia alone. Ducati offers a range of the most highly sophisticated and sought-after bikes ever created. Names like Diana, Darmah, Pantah, Scrambler and Paso have entered the lexicon as exemplars of premium performance and timeless Italian style. During the last 10 years and since the investment by TPG, Ducati has grown from a pure manufacturing company, to a company with a deep product line for the motorcycle enthusiast. It now provides a full motorcycling experience, centered on the technical excellence of its motorcycles but also offering racing, heritage, accessories and apparel. The company recently opened three retail stores stocking Ducati brand products and souvenirs, and has signed a three year licensing agreement with luxury travel, business and lifestyle accessories producer Tumi. Through superior engineering, competition testing and cutting-edge design, Ducati has built an enduring motorcycle legacy. From the fastest sport bikes to the meanest Monsters, Ducati turns into reality the dreams of even the most fanatical enthusiasts and the most demanding riders. www.ducati.com
PETCO* is a leading specialty retailer of premium pet food, supplies and services. It operates over 775 stores across the US that offer more than 10,000 high-quality pet-related products, generating sales of US$1.8 billion (A$2.4 billion). PETCO’s vision is to create a fun and exciting shopping experience, online and in stores, for customers and their pets. The chain offers a complete selection of pet-related products and pet services, including grooming, canine education, vaccination clinics, and photography at competitive prices with superior customer service at convenient locations. *This investment was sold in 2004. www.petco.com
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The Investors
Newbridge Capital LLC is one of Asia's leading private equity investment firms with $2.3 billion of capital under management. Founded in 1994 by Texas Pacific Group and Blum Capital Partners, Newbridge was one of the first private equity firms dedicated to Asian investments. Today, Newbridge has completed 24 investments and has 32 professionals throughout the region with offices in Hong Kong, Melbourne, Mumbai, San Francisco, Seoul, Shanghai, Singapore and Tokyo. Texas Pacific Group manages one of the world’s largest private investment companies with more than $15 billion of assets under management. Founded in 1992, TPG pursues investments in leading businesses within a broad range of industries, including retail, branded consumer franchises, financial services, technology, media and communications, healthcare, airlines and industrial. The firm’s 70 investment professionals and other staff are based in offices in San Francisco, London and Fort Worth, Texas. Blum Capital invests in companies it believes to be fundamentally undervalued and where an opportunity exists to work with management to implement strategies that will enhance shareholder value. The Myer Family Company is a broadly based equity investment company. Mr Sidney Myer, founder of the Myer Family Company, opened the first Myer store in Bendigo in 1900. The company’s portfolio includes a significant investment (approx. 4%) in Coles Myer Limited.
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