Irish private equity rescue for Patisserie Valerie

A part of the beleaguered café chain owner Patisserie Holdings has been rescued out of administration by an Irish private equity company with the help of its new management.

Dublin-based Causeway Capital Partners acquired the assets and business of Patisserie Valerie in a deal brokered on Thursday while UK retail group AF Blakemore picked one of the group's other chains, Philpotts.

The rescue of those two divisions of Patisserie Holdings cost £13 million (€14.7 million), a statement to the stock exchange said.

Steve Francis, the turnaround specialist who was brought in as chief executive of Patisserie Valerie, said: “We are delighted to welcome Causeway Capital as our partners in Patisserie Valerie, ending a disruptive period of uncertainty for the business.”

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Causeway already controls more than 65 outlets of BB’s bakers and baristas across Britain and Ireland, said that 96 of the company’s stores in Britain and Northern Ireland would remain open.

It was silent on the fate of the company's two outlets in Dublin, although KPMG previously said it expected they would close.

Maiden fund

Causeway Capital Partners, which has offices in Dublin and London, invests in established Irish and British businesses. Its investment in Patisserie Valerie will be the sixth completed investment from its maiden fund. The company also controls Celtic Linen and Bizimply.

Emmet O’Neill, who sold Smiles Dental for €36 million in 2014 and was a former Topaz chief executive, is an investor in Causeway. The company is also backed by the Ireland Strategic Investment Fund as well as financial institutions and institutional investors.

A spokesman for Causeway Capital said the 2,000 or so employees working in the business would transfer to a new corporate entity operating the Patisserie Valerie business with their existing employment rights and benefits honoured.

Causeway Capital’s Matt Scaife said Patisserie Valerie was a “heritage brand, much loved by its loyal customers”.

‘Turbulent period’

“This investment should mark the end of a turbulent period for customers and suppliers alike,” he said. “We are delighted to partner the team and look forward to helping the business return to growth.”

Patisserie Valerie, which was founded in London’s Soho district in 1926, is understood to have had more than 120 shops altogether before it ran into trouble last October after its then owner uncovered accounting irregularities. KPMG administrators Blair Nimmo and David Costley-Wood closed 70 stores and concessions from the group, resulting in 920 redundancies, while they pursued a sale of the business.

“It was clear from the outset of our appointment that the loyalty shown in the brands from their very many customers was a significant factor in ensuring that these businesses would remain part and parcel of our high streets,” Mr Costley-Wood said on Thursday.

Baker & Spice and two other brands within the group are to be sold separately.

Causeway Capital Partners was advised by Burges Salmon Solicitors. – Additional reporting: Reuters