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Warburg, TPG set to make 2.5x return on $6bn Neiman Marcus sale

10 Sep 2013

handbag-5_sqPrivate equity firms Warburg Pincus and TPG Capital reportedly stand to make a return of about 2.5 times on their investment in luxury goods retailer Neiman Marcus through its $6bn sale to Ares Management.

Both firms are set to receive about $3.1bn in total from the sale and a dividend payout from last year, well above the $1.2bn they each invested in 2005 according to Bloomberg, which cited two people with knowledge of the matter.

It said the $6bn sale represented 9.5-times the company’s EBITDA in the 12 months to April 27, adding that the private equity pair paid about 9-times trailing EBITDA in their buyout.

The buyout firms bought into Neiman ahead of fellow private equity firms including Blackstone, Bain Capital, Thomas H Lee Partners and KKR.

AltAssets reported yesterday that Ares Management and Canada Pension Plan Investment Board were in advanced talks to buy retailer Neiman Marcus, meaning the company might not go ahead with its plans for an IPO.

Last month Neiman Marcus hired a syndicate of banks to explore a potential IPO and asked Credit Suisse to identify alternative sales options.

In June AltAssets reported that TPG Capital and Warburg Pincus were nearing an overdue exit from the luxury retailer after the company filed to raise $100m through an initial public offering.

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