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TPG Eyes Discount Frenzy With Poundworld Deal

TPG Eyes Discount Frenzy With Poundworld Deal

One of the world's biggest buyout firms is in advanced talks to buy Poundworld in a deal that would underline the frenzy surrounding Britain's discount retail sector.

Sky News has learnt that TPG has been in exclusive negotiations to buy the Yorkshire-based company for more than a month.

Poundworld is expected to be valued at more than £120m as part of any deal, which would crystallise a huge fortune for Chris Edwards, a market trader who opened his first store in 2004.

He now runs the business with his son Chris Jnr, who is Poundworld's trading director and was described by one source this weekend as "one of the sharpest buyers in UK retailing".

It is not clear how quickly TPG and Poundworld will be able to strike a deal.

A number of other private equity firms, including Apax Partners and CCMP Capital, also held talks with Mr Edwards but did not pursue a deal.

Andy Bond, the former Asda chief executive, has also been examining an offer for Poundworld as he draws up plans to launch Pep & Co, a new retailer that will open its first shop later this year.

Poundworld operates from more than 270 stores and last year struck a £26m financing deal with Santander UK to support an accelerated expansion plan.

Once stigmatised by high street shoppers, bargain retailers like Poundland have become a thriving part of the consumer economy even as the UK economy continues its recovery.

Rivals Poundland and B&M Bargains have both listed on the London Stock Exchange in the last 18 months, and now boast market capitalisations of £965m and £3.2bn respectively.

Earlier this month, Poundland announced a deal to buy 99p Stores, another competitor, for £55m.

The takeover is conditional on approval from competition regulators because the addition of 99p Stores' 251 outlets to Poundland's estate of 534 UK shops may prompt concerns that the combined group would be too large.

Although it is typically associated with much larger deals, TPG has shown an appetite for investing in British retailers, having bought a controlling stake in Victoria Plumb last year.

It was part of a consortium which took Debenhams private in 2003 and then controversially re-floated it on the stock market three years later.

More recently, TPG had a troubled experience with Republic, the fashion chain, which fell into administration in 2013 shortly after Mr Bond stepped down as its chairman.

TPG, Poundworld and PricewaterhouseCoopers, which is advising on the sale, all declined to comment.