3i, the international private equity group, has acquired an unspecified minority stake in Go Outdoors, the large-scale U.K. outdoor retailer, by buying existing as well as newly-issued shares. It has invested 28 million British pounds (€31.2m-$46.2m) in Go Outdoors, which will be used for the retailer’s planned expansion from 30 to about 70 stores in the next four years.
The founders and managers of Go Outdoors are retaining significant stakes in the company, along with YFM Equity Partners. The management is headed by Paul Caplan, president and largest shareholder of Go Outdoors, and John Graham, its founder and managing director.
As part of the deal with 3i, the management team has been strengthened with the arrival of Colin Holmes as chairman. Formerly at Tesco, Holmes replaces John Lovering, a private equity tycoon who joined Go Outdoors only last August. Furthermore, two representatives from 3i, David Whileman and Justin Maltz, will join the board of Go Outdoors.
Go Outdoors reported sales of £114.9 million (€127.9m-$189.8m) for the year until 30 January, up from about £75 million (€83.5m-$123.9m) the previous year. Its concept is based on large, out-of-town stores with a wide assortment of outdoor products, including private labels and many other affordable ranges.
The Yorkshire-based company is one of the retailers that have been leading the concentration of the U.K. outdoor market in the last years. Another one is Cotswold Outdoor, the retailer owned by Lion Capital along with A.S. Adventure in Belgium and Bever in the Netherlands. On the other hand, Blacks Leisure, the owner of the Blacks and Millets banners, has been shrinking continuously in the last four years.
3i said it was not relying on any significant growth in the U.K. outdoor market itself, but it was particularly attracted by Go Outdoors’ approach, which had the potential of becoming a category killer model. The investment company estimates that there is enough space in the British market for at least 100 Go Outdoor stores, and it plans to open about 10 stores per year.
The new shareholders have observed that, where Go Outdoors opened stores, it tended to create additional demand. However, they anticipate that the roll-out of more Go Outdoors stores is likely to be detrimental to independent urban stores.
The investment by 3i in Go Outdoors comes a few months after Blacks Leisure apparently failed to attract any buyers for its own struggling operations at the required price. It entered talks with several interested parties last year but announced earlier this year that the discussions had come to an end.