Breaking News

Glaxo to Pay $488.7 Million Fine to End China Corruption Probe
Tweet TWEET

Warburg, TPG Said to Pocket 150% Profit on Neiman Marcus

Photographer: Craig Warga/Bloomberg

Neiman Marcus Inc. is the ninth investment Warburg Pincus LLC has exited this year, according to data compiled by Bloomberg. Close

Neiman Marcus Inc. is the ninth investment Warburg Pincus LLC has exited this year,... Read More

Close
Open
Photographer: Craig Warga/Bloomberg

Neiman Marcus Inc. is the ninth investment Warburg Pincus LLC has exited this year, according to data compiled by Bloomberg.

Neiman Marcus Inc.’s private-equity backers stand to reap more than a 150 percent profit in the luxury-goods retailer’s $6 billion sale to Ares Management LLC and the Canadian Pension Plan Investment Board, according to two people with knowledge of the matter.

Buyout firm Warburg Pincus LLC, which is based in New York, and TPG Capital, led by Fort Worth, Texas, financier David Bonderman, will garner about $2.75 billion in the sale, based on information in Neiman Marcus’s regulatory filings. Including their share of a dividend paid last year, the two sponsors will pocket about $3.1 billion, or more than 2.5 times the $1.2 billion they sank into a $5.1 billion leveraged buyout of Neiman Marcus in 2005, said the people, who asked not to be identified because the information is private.

The owners, who had filed for an initial public offering of Neiman Marcus in June, opted for an outright sale after as private-equity firms race to sell assets amid rising stock values and strong credit markets.

Lisa Baker, a TPG spokeswoman at Owen Blicksilver Public Relations Inc., and Ed Trissel, a Warburg Pincus spokesman, declined to comment on the firms’ profit.

The firms took a combined 83 percent equity stake in the company when they brought it private, according to regulatory filings. Los Angeles-based private-equity firm Leonard Green & Partners LP and Credit Suisse Group AG’s private-equity unit co-invested in the deal eight years ago.

The $6 billion price equates to 9.5 times Neiman Marcus’s earnings before interest, taxes, depreciation and amortization, or Ebitda, in the 12 months ended April 27, according to data compiled by Bloomberg.

Debt Repaid

Warburg Pincus and TPG had paid about 9 times trailing Ebitda for the company. Neiman Marcus has repaid more than $500 million of the $3.2 billion of debt used to finance the 2005 acquisition, according to company filings.

Neiman Marcus is the ninth investment Warburg Pincus has exited this year, according to data compiled by Bloomberg. The biggest was eye-care company Bausch & Lomb, whose $9 billion sale brought Warburg Pincus a profit of about 200 percent on its $1.7 billion investment, a person familiar with the matter said in May. The firm oversees more than $40 billion in assets.

TPG, which oversees $55.3 billion, has been a more active buyer than seller in 2013, engineering about 20 small and mid-size purchases.

To contact the reporter on this story: David Carey in New York at dcarey13@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.