Investment bank JPMorgan and ING have lost tens of millions on the acquisition of lingerie chain Hunkemöller at the beginning of this year, the Dutch business newspaper reports. FD based on sources who wish to remain anonymous. It is said to be about 40 million euros.
Not that the bankers of JPMorgan and ING have suddenly become lingerie sellers. No, they advanced investment companies Parcom and Opportunity Partners 272 million euros when they bought a majority stake in the lingerie chain from then-owner Carlyle at the beginning of this year. That American ‘private equity fund’, which invests in unlisted companies, had taken over the originally Dutch Hunkemöller from the French PAI in 2015, but put it up for sale again in 2020 after a failed IPO.
Looking for margin
“It is not unusual for private equity funds to borrow money from banks for this type of takeover,” says Pascal Paepen, lecturer Banking & Finance at Thomas More. “Certainly in periods of zero or negative interest rates, they try to resell them in search of more margin. But if market conditions suddenly change, for example due to the war in Ukraine and the inflation that is going through the roof, then you are suddenly less strong in the negotiations and you have to give a discount to convince the interested parties. That is precisely why I am not a fan of this type of transaction at all: trading bank loans sooner or later leads to problems,” says the banking specialist. According to the Dutch business newspaper FD the loss amounts to 40 million euros, of which “the largest part for JPMorgan”.
Lots of bras and panties
The new owners of Hunkemöller are also suffering from the blows: “The interest they pay on the credit was ultimately set at 9 percent, while it was initially supposed to be around 7 percent,” says Van der Weijden. FD. “And that on a credit of 272 million euros? You have to sell a lot of extra bras and panties for that, don’t you?” says Pascal Paepen with a wink.
Hunkemöller, founded in 1886 by a German migrant in Amsterdam, had to temporarily close most of its 900 stores – twenty of which are in Belgium – during the corona pandemic. It saw its turnover in the crisis year 2020-21 fall by 12 percent to 458.8 million euros and its gross operating profit halved to 40.6 million euros. In the financial year to the end of January 2022, sales increased by 22 percent to EUR 560 million and gross operating profit doubled to EUR 82 million. Although the current financial year is reported to be somewhat more difficult due to the increased inflation and the higher wage costs.