News & Analysis

Hg shuts down consumer unit

The private equity firm, which manages fashion brands Bench and Hooch, is re-distributing its consumer and leisure investment team. HgCapital is also to close its Amsterdam office.

-

HgCapital has today closed down its consumer and leisure investment unit and divided the team’s investors among its healthcare, business services, technology and industrials units.

“Running four larger teams will deliver the benefits of better deal origination and improved conversion and execution,” the company said in a statement.

The four-person consumer and leisure team was headed by Richard Mathews, who joined HgCapital in 1998, and also included Sophie Albizua and Jason Khaksar, who were both hired in November 2007.

HgCapital decided to close the unit several weeks ago as a result of a performance assessment which found that its investment areas which performed best had the biggest teams, a spokesman for the firm said.

HgCapital’s consumer and leisure portfolio includes Americana, which owns fashion brands Bench and Hooch. Out of the nine investments made by the consumer and leisure team only Americana and Cornish

Hooch: A
household brand

pasty maker Cornish Bakehouse are listed as “current” on the firm’s website, with all others having been exited or in the process of disposal.

HgCapital’s decision to scale down its operations in the consumer space comes amid a surge in bankruptcy among private equity-backed retailers. NRDC-backed Fortunoff, a US jewellery and home furnishings company, filed for Chapter 11 bankruptcy protection in January, while other big name bankruptcies include Apollo Global Management's Linens 'n Things and TA Associates-backed clothing retailer Steve & Barry’s.

HgCapital’s Amsterdam office also is due to close, leaving just the London and Frankfurt office. There are approximately four investment professionals who work out of the Amsterdam office.

A small number of people will leave the firm as a result of the changes,a spokesman said. In total HgCapital has 45 staff members.

Last month HgCapital cut the management fees for Hg Fund VI, capping them at 1.75 percent for its prospective £2 billion (€2.5 billion; $3.2 billion) fund. The fund's initial target had been £1 billion, a small increase on HgCapital V, which it closed on £950 million in 2006.

HgCapital currently has €2 billion under management, and was established in 2000 as successor to Mercury Private Equity.