Belgian fund close to HEMA acquisition

Belgian Core Equity holding is allegedly close to acquiring Dutch chain HEMA: a verbal agreement is apparently in place, all that is required are the signatures.

Interested party after all

Dutch newspaper De Telegraaf revealed the news that the investors from Brussels would want to acquire the Dutch company from its current British owner Lion Capital, which bought HEMA in 2007 for 1.1 billion euro from Maxeda. The newspaper cites four sources from the retail and financial industry that confirm the news. That is despite the fact that only a month ago, the asking price (1.2 billion euro) was still too high for the interested buyers.

Lion wanted to sell HEMA for quite some time, but could not find a fitting buyer (until now?). HEMA did radically expand internationally to drive up the price in the past few years: it launched plans to open another 150 Spanish and 70 German stores last year and it also entered non-European soil this year, with a first store in Dubai. 

That expansion helped boost turnover tremendously: in the past quarter, turnover grew 3.5 % to 1.24 billion euro, but the chain did suffer a 30.9 million euro loss last year. However, Hema points out that the bulk of those losses were related to the potential sale: in the last two quarters of last year, it did generate a decent profit.

Buyer is Belgian phenomenon

Buyer Core Equity Holdings is a relatively young investment firm from Brussels, which managed to attract one billion euro in what Institutional Investor called “the largest first-time fundraiser ever”. The group was founded by four former Bain Capital members, an American financial giant that dealt with companies like Burger King, Domino’s Pizza, Dunkin’ Donuts, Toys R Us and Warner Music.

According to the Financial Times, Core Equity is a rarity in the private equity world, where companies usually get rid of their acquisitions within a five-year period. However, Core Equity aims to hold onto its companies for at least ten years, because “that is a better way to long-term manage companies”.