San Francisco-based middle-market growth equity firm TSG Consumer Partners (TSG) is reportedly said to be working with Justin Cameron, founder and former CEO of Sidney, Australia-based SurfStitch Group Limited (ASX: SRF) on a potential takeover and privatization of the Australian online clothes retailer.
Cameron submitted his resignation from his CEO and managing director positions at SurfStitch, in conjunction with his plan to acquire the A$380 million ($284 million) company in partnership with a private equity firm, just 15 months after listing on the Australian Securities Exchange, according to a company filing.
SurfStitch’s board has engaged UBS as its financial adviser and Herbert Smith Freehills to act as its legal adviser.
SurfStitch “has not yet received any formal or informal proposal from, nor had any discussions with, private equity in relation to a potential acquisition of the company,” it said. “Furthermore, the company has not received any specific information from Mr Cameron in relation to what the possible terms and conditions may be of any potential acquisition proposal,” the company added. Howard McDonald, the company’s chairman, is monitoring its activities and day to day operations.
Australian media reports about TSG’s business relationship with Justin Cameron and any takeover plans with respect to SurfStitch have not been confirmed.
“Cameron’s move comes just two weeks after the online retailer backed away from its full-year earnings guidance – triggering a share price plunge – saying it wanted to have the flexibility to invest in content to drive future expansion of its e-commerce business,” says the Sidney Morning Herald.
“SurfStitch shares jumped 22 per cent to $1.45 on Thursday before closing up 13¢ at $1.31. The stock had fallen almost 40 per cent in the last two weeks, from $1.73 to as low as $1.07, after the group abandoned guidance,” SMH added. “The shares are still trading well below their November high of $2.07 and the $2 a share investors paid in a share placement that month to fund a series of content acquisitions.”
The stock was issued at $1.00 a share at its Australian IPO ran by JPMorgan AG in December 2014.
SurfStitch Group operates as an online action sports and youth culture apparel retailer in Australia, UK, North America, France and Japan, employing 500 people globally. Its principal products include surf and snowboard apparel, accessories, hard goods, footwear, and skates. The company offers its products through its websites, SurfStitch.com, Surfdome.com, SWELL.com, Magicseaweed.com, and Stabmag.com. The company has been recognized as best Pure-Play Online Retailer of the year in 2011, 2012 and 2014 at the renowned Online Retail Industry Awards, ORIAS. SurfStitch was founded in 2007 by Justin Cameron and Lex Pedersen. Prior to SurfStitch, Cameron was an investment banker and research analyst at Credit Suisse, and Pedersen used to run Surfection surf shops.
TSG Consumer Partners, LLC is a leading investment firm with $5 billion of assets under management, focused exclusively on the branded consumer sector. Since its founding in 1987, TSG has been an active investor in the food, beverage, restaurant, beauty, personal care, household and apparel & accessories, and e-commerce sectors. Representative past and present partner companies include vitaminwater, thinkThin, popchips, Muscle Milk, Yard House, Stumptown, Pabst, Planet Fitness, REVOLVE Clothing, Smashbox Cosmetics, Pureology, Sexy Hair, e.l.f. cosmetics and IT Cosmetics.
TSG pioneered focused sector investing as one of the first private equity funds to invest solely in consumer products companies. The firm has achieved a top-tier track record and expertise in growing consumer brands. The average net IRR to its limited partners is approximately 24% through its history, 30% for its last three funds, and 50% for its most recent fund. In addition, TSG is unique in the number of women in its senior ranks and throughout the firm – 50% overall – driven by a belief in the value of diverse perspectives across an investment team.
In December 2015 the firm announced the closing of two oversubscribed new funds with capital commitments of $2.5 billion: TSG7 A is focusing on larger, high growth consumer companies with equity investments generally ranging between $50 million and $400 million. TSG7 B is focusing on smaller, high growth companies with equity commitments generally ranging from $15 million to $50 million.
The firm was founded in 1987 as the Montgomery Consumer Fund, a partnership with an initial equity interest from Montgomery Securities. In 1988 the firm’s founders, J. Gary Shansby and Charles H. Esserman, repurchased Montgomery Securities’ interest and renamed the company The Shansby Group. The firm changed its name to TSG Consumer Partners in 2005 when Shansby left the firm and Esserman became CEO.