Asda’s private equity co-owner has valued its stake in the grocer at almost 20 times the amount it paid last year.
TDR Capital, which bought the supermarket chain alongside the billionaire Issa brothers, used an unusually small amount of its own money in the £6.8bn acquisition.
It funded the rest by piling debt on the supermarket chain and selling off some of its assets in what was the UK’s biggest leveraged buyout for more than a decade. Now TDR has told investors that it has already marked its stake at 19.8 times its original investment.
Asda received an upfront windfall when it sold 27 warehouse properties with a book value of £497.5m to Blackstone for £1.7bn last year. TDR and the Issas had originally budgeted for warehouse sale and leasebacks to contribute £950m towards the cost of the acquisition.
Valuing Asda at 9.1 times core earnings — the same multiple that rival buyout group CD&R said it paid for Wm Morrison last year — would make it worth £11.8bn, including debt, more than 1.7 times its £6.8bn value when the Issas and TDR acquired it.
