Leahy Firm Woos Chinese For New Look Bid

The investment firm which employs the former Tesco boss Sir Terry Leahy is courting Chinese backers to assemble a bid for New Look, the high street fashion chain.

Sky News has learnt that Clayton Dubilier & Rice (CD&R) has held preliminary talks with CDH, a Chinese private equity group, about a joint offer for the UK's second-biggest womenswear retailer.

The discussions between the two firms have not yet resulted in a definitive agreement to bid, but they underscore the growing influence of Chinese investors in deals involving major Western brands.

In New Look's case, the involvement of CDH reflects the future importance of China as a market for the chain, whose chief executive has set a target of 70 stores in the country by the end of the financial year.

CDH has acquired stakes in companies such as China's biggest milk producer, Mengniu Dairy and Belle International Holdings, a women's shoe retailer.

It is not clear whether Sir Terry is leading CD&R's involvement in the prospective New Look bid.

One source cautioned that it was "very early days" and unclear whether a formal offer would materialise.

Sir Terry, who launched an outspoken attack on his successor at Tesco, Philip Clarke, earlier this year, has been a senior adviser to CD&R for four years and is chairman of B&M Retail, the discount chain which floated last year.

CD&R also employs Paul Pressler, the former boss of Gap, the US clothing retailer.

New Look's owners have begun exploring options to sell or float the company following an improvement in its performance and as financial market conditions have encouraged privately owned businesses to explore alternatives.

Sky News revealed in February that Apax and Permira, which acquired New Look in 2004, had recruited JP Morgan, the Wall Street bank, to work on a stock market listing that could value it at as much as £2bn.

JP Morgan is working alongside Goldman Sachs, which has been working to identify other potential investors, including Chinese groups such as Fosun and Citic.

In 2010, Apax and Permira were forced to abort a flotation amid challenging markets.

During the intervening period, New Look's debt position had rendered a listing not viable.

The chain, which trades from more than 800 stores in 21 countries around the world, is the UK's second-biggest women's value clothing and accessories retailer, according to Kantar Worldpanel, a research firm.

Its founder, Tom Singh, also remains a shareholder.

According to third-quarter financial results released in February, New Look saw like-for-like sales in the UK decline by 1%, a dip that it attributed to unseasonably warm weather.

The company is continuing to expand internationally, as well as attempting to grow its menswear business.

It now has nearly 20 shops in China although it retreated from Russia and Ukraine because of continuing instability in the two countries.

Anders Kristiansen, its chief executive, described New Look's trading performance as "robust...against a challenging backdrop".

"It was a record online sales performance over the Christmas period with all channels well-prepared for peaks in demand around Black Friday, Cyber Monday and Boxing Day, whilst our high street presence came into its own as we handled a surge in demand for our Click & Collect and Order in Store offerings," he said.

Mr Kristiansen described the company as being "ready to float" although he added that a decision to do so rested with the chain's owners.