Carlyle, TPG circling Steinhoff

Freedom Furniture, Fantastic Furniture and Best and Less are among Steinhoff’s brands

The Carlyle Group and TPG Capital are believed to be scrutinising the Australian arm of Steinhoff in preparation for an anticipated sale of the company that owns Freedom Furniture, Fantastic Furniture and Best and Less.

It comes as Blackstone and Kohlberg Kravis Roberts are also positioning themselves for a highly anticipated divestment.

With the strong level of private equity interest, some sources say that the prospect of a mooted management buyout by those in charge of the Asia Pacific operations is now looking increasingly slim.

Deutsche Bank had been involved in a recent refinancing of the company, which is thought to have seen banks, including ANZ and the NAB, achieve a secured rather than non-secured position.

While the official line is that the company is not for sale, the suggestion is that a data room has been opened with Ferrier Hodgson working for the Asia Pacific arm of the company, and the theory is that this has been for prospective buyers to sound out the operation.

The company is not thought to be mulling a sale of its property assets, but instead is eager to divest the entire Australian operation in one line as part of a wind-up of the operations internationally.

Should this not happen, a logical move would be to sell off Best & Less and Harris Scarfe separately to retail acquirers like the private equity firm Alceon.

However, while Alceon — the backer of retail company Noni B — is believed to be circling Specialty Fashion Group, Best & Less is not thought to be on its agenda for acquisitions.

Steinhoff struck a refinancing deal last week with its existing syndicate of six lenders, where it received an additional $300 million for 12 months amid a probe into the accounts of its parent company by financial authorities in Frankfurt, triggering a major collapse in its share price.

Landlords housing retailers within the Steinhoff stable are understood to be nervous.

It is thought that groups have advisers on standby in the event that the Australian arm of Steinhoff International should collapse or its Australian operations are sold to private equity. The expectation is that should a private equity firm take over the business, rents will be renegotiated.

Thought to be affected by any closures of stores within the portfolio of brands will be major landlords like Westfield, but also other real estate owners including Aventus Property, Altis Property Partners and Fortius.

Among those working for landlords is believed to be Wexted Advisors partner Joe Hayes, although he declined to comment on his involvement.

In its annual report, the local Steinhoff arm said concerns over Steinhoff International’s accounting irregularities had the potential to impact the Asia-Pacific business.