Carlyle to seize control of online retailer Very Group from Barclay family

Yahoo

6 hours ago

The American investment giant Carlyle is preparing to take control of Very Group, one of Britain's biggest online retailers, in a deal that will end the Barclay family's long tenure at another major UK company.
Sky News has learnt that Carlyle, which is the biggest lender to Very Group's immediate parent company, could assume ownership of the retailer as soon as October under the terms of its financing arrangements.
On Friday, sources said that Carlyle was expected to hold further talks in the coming weeks with fellow creditors including IMI, the Abu Dhabi-based vehicle which assumed part of Very Group's debts in a complex deal related to ownership of the Telegraph newspaper titles.
Carlyle will probably end up holding a majority stake in Very Group, which has about 4.5 million customers, once it exercises a 'step-in right' which effectively converts its debt into equity ownership, the sources said.
Very Group - which is chaired by the former Conservative chancellor Nadhim Zahawi - borrowed a further £600m from Arini, a Mayfair-based fund, earlier this year as it sought to stave off a cash crunch and buy itself breathing space.
Precise details of the company's capital and ownership structure will be thrashed out before the change of control rights are triggered at the beginning of October.
The Barclay family drew up plans to hire bankers to run an auction of Very Group earlier this year, but a process was never formally launched.
Carlyle, which declined to comment, may hold onto the business for a further period before looking to offload it.
IMI is also likely to end up with an equity stake or a preferred position in the recapitalised company's debt structure, sources added.
Prospective bidders for Very Group were expected to be courted on the basis of its technology-driven financial services arm as well as the core retail offering which sells everything from electrical goods to fashion.
Retail industry insiders have long speculated that the business was likely to be valued in the region of £2.5bn - below the valuation which the Barclay family was holding out for in an auction which took place several years ago.
Very Group - previously known as Shop Direct - is one of the UK's biggest online shopping businesses, owning the Very and Littlewoods brands and employing 3,700 people.
It boasts well over £2bn in annual sales, with about one-fifth of that generated by its Very Finance consumer lending arm.
Mr Zahawi was appointed as the company's chairman last year, days after he announced that he was standing down as the MP for Stratford-on-Avon at July's general election.
He replaced Aidan Barclay, a senior member of the family which has owned the business for decades.
In the 39 weeks to 29 March, Very Group reported a 3.8% fall in revenue to £1.67bn, which it said included "a decrease in Littlewoods revenue of 15.1%, reflecting the ongoing managed decline of this business".
Nevertheless, it said sales in its home and sports categories were performing strongly.
IMI's position is expected to be pivotal to the talks about the future of the business, given Abu Dhabi's status as an important global backer of buyout, credit and infrastructure funds such as those raised and managed by Carlyle.
The UAE vehicle is expected to emerge from the protracted saga over the Telegraph's ownership with a 15% stake in the newspapers.
Under the original deal struck in 2023, RedBird and IMI paid a total of £1.2bn to refinance the Barclay family's debts to Lloyds Banking Group, with half tied to the media assets and the other half - solely funded by IMI - secured against other family assets including part of Very Group's debt pile.
The Barclays, who used to own London's Ritz hotel, have already lost control of other corporate assets including the Yodel parcel delivery service.
A spokesman for Very Group declined to comment, while IMI also declined to comment.