Ottakar's
Transaction Background
In December 1992 Graphite Capital invested to fund the roll-out of Ottakar’s, a chain of seven bookshops located in market towns in the south of England. Over the following five years we provided further expansion finance.
Deal Attractions
We backed a strong manager, who had developed the Ottakar’s concept and product offering over the preceding four years. Ottakar’s was ready to be rolled out across the UK. By focusing on small and medium-sized towns, there was limited competition from larger chains. In addition, the greater purchasing power and strong management systems enabled Ottakar’s to compete effectively against independent bookstores as well as larger multiples.
Achievements
- turnover increased to £38.6 million and operating profit increased 20-fold between 1992 to 1998
- during Graphite’s ownership the group opened 40 book shops
- growth was achieved through a combination of store openings and strong like-for-like growth
Exit
- the company floated on the London Stock Exchange in April 1998
- we realised nearly half our holding then and steadily reduced our holding in the market during the following years
- the internal rate of return on our investment was 49.8 per cent
- we achieved a multiple of 6.0 times our initial cost
- in July 2006 Ottakar's was acquired by HMV Group plc to integrate the 146 stores with its Waterstone's outlets
