Larry Kestelman’s Queens Lane Capital snaps up Pas Group

Entrepreneur and NBL franchise owner Larry Kestelman.

The private equity interests of Melbourne-based entrepreneur Larry Kestelman have purchased the Australian fashion retailer Pas Group.

A potential deal was flagged by DataRoom on September 22.

The acquisition was made by Queens Lane Capital, the private equity investment arm of the LK Group.

The restructured group will consist of 166 stores in addition to the wholesale design and development businesses.

It comes after 31 stores were closed and Pas’ loss making JETs business was sold.

Key brands in the portfolio include Review, Black Pepper, Yarra Trail, Marco Polo, and Breakaway.

It has licences for brands including Everlast, Lonsdale, Slazenger and Mooks, Bluey, Disney and Peter Rabbit.

Mr Kestelman. who chairs Queens Lane Capital, said he was excited about the opportunity to re-position the group for growth.

“We are proud to have saved circa 1,000 Australian Jobs and with a turnover of $200 million there are tremendous opportunities to further grow the PAS Group,” he said.

“A major focus will be on building the online business which has expanded to 25 per cent during COVID-19 and developing a single customer view through further marketing and online investment.

Mr Kestelman, who founded the internet company Dodo and owned the Melbourne United basketball team, had earlier been a shareholder of the listed Pas Group, and moved to block a takeover bid of the company in 2015 by Coliseum Capital with his 10 per cent stake.

His business interests span across a range of sectors including technology and property.

Pas was placed in voluntary administration on May 29 and has been under the control of PwC.

For the 2019 financial year, Pas Group generated a $1.8m annual net profit and $272.6m of sales.

While listed, the company was earlier 65 per cent owned by private equity firm Coliseum Capital, based in Connecticut, that was co-founded by Adam Gray, who is the chairman of Australian traffic technology company Redflex.

At that time it launched its takeover bid, Coliseum was offering $86m for the retailer, or 63c a share, but the offer was rejected.

The private equity firm has made efforts to bulk up the business with further acquisitions, at one stage looking at retail fashion group Sussan, so that it could stage an exit.

Mr Kestelman told The Australian on Tuesday night, after the deal was unveiled, that he saw the resurrection of Pas as a “consumer play”.

Asked why he was entering fashion retail at the worst of times for the sector, the former Pas shareholder said he “didn’t like to walk away from a fight”.

“If you have a look at why I have got involved in certain things, I was already a shareholder when this company got itself in trouble, the second biggest shareholder,’’ he said.

“There were about 1000 people that were about to lose their jobs and I looked at the business and I believe with my background across a lot of different businesses, I love consumer businesses and to me retail is no different.”

He said he brought skills that Pas needed to evolve and become a better retailer.

“There are some amazing brands in this business … a lot of high-end brands. I love the idea of working with high-quality brands and taking them to market. Even though I have not done specific retailing, it is a consumer play, it’s a retail play and it is a business play. I have done all of those things in my life … it will be extremely hard especially under COVID circumstances but I didn’t feel I could take a backward step and walk away from it without giving it a red-hot go.

“I think I have a track record of picking fights and going in there really hard and generally succeeding.”

A potential deal was flagged by The Australian’s DataRoom last month.

The acquisition was made by Queens Lane Capital, the private equity investment arm of the LK Group. The restructured group will consist of 166 stores in addition to the wholesale design and development businesses.

It comes after 31 stores were closed and Pas’s loss-making JETS business was sold.

Key brands remaining in the portfolio include Review, Black Pepper, Yarra Trail, Marco Polo and Breakaway. It also has licences for brands such as Everlast, Lonsdale, Slazenger, Mooks, Bluey, Disney and Peter Rabbit.

Mr Kestelman, who chairs Queens Lane Capital, said he was excited about the opportunity to reposition the group for growth.

Mr Kestelman had earlier been a shareholder of the listed Pas, and moved to block a takeover bid of the company in 2015 by Coliseum Capital with his 10 per cent stake.

His business interests span a range of sectors including technology and property.

Pas was placed in voluntary administration on May 29 and has been under the control of PwC.

For the 2019 financial year, it generated a $1.8m annual net profit and $272.6m of sales.