When Graphite first invested in Ottakar’s in 1992, the company had a chain of seven bookshops located in market towns in the south of England. These were performing reasonably well and the company required further funding to continue its expansion. Unlike the local independent retailers, Ottakar’s had the ability to negotiate volume discounts and to introduce a wider range of books to the local market.
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.
Key Business Achievements
Increased turnover to £38.6 million
Grew operating profit by a factor of 20 between 1992 and 1998
Opened 40 book shops in diverse locations
Achieved strong like-for-like growth in established shop locations
Return on Graphite's Investment
In 1998 Ottakar’s floated on the London Stock Exchange and was subsequently sold to HMV Group plc, generating a multiple of 6.0 times cost and an IRR of 50 per cent.