TowerBrook Capital Partners LP stands to quadruple its investment with the IPO of J. Jill Inc, the women’s clothing retailer it acquired less than two years ago.
J. Jill set the terms of its IPO on Feb. 27. The company is expected to price 11.67 million shares at $14 to $16 each. Underwriters on the deal have the option to buy another 1.75 million shares in an over-allotment option.
Private equity firms typically do not sell shares in the IPOs of their portfolio companies. If they do, it’s usually a sliver of their holdings. TowerBrook is breaking that unofficial rule. All the shares offered in the J. Jill IPO are coming from TowerBrook.
J. Jill, Quincy, Massachusetts, sells clothing like dresses, jackets and shoes to affluent women aged 40 to 65. The typical J. Jill woman is college-educated, lives in a household with an income exceeding $150,000, works outside the home and has children, an SEC filing says.
J.Jill reported roughly $562 million in sales for the year ended Jan. 30, 2016, up 16 percent from $483.4 million posted for the year earlier, SEC filings said. The company employs 1,406 full-time people and 2,395 part-time staffers.
TowerBrook, which invests in large and mid-market companies, acquired J. Jill in May 2015 in a deal valued at $400 million. The PE firm invested $160 million equity, SEC filings said. TowerBrook used its fourth fund, which raised $3.8 billion in 2013, to invest in J. Jill.
The PE firm has already gotten some of its money back. In May, J. Jill borrowed $40 million that it used, along with cash on hand, to pay a $70 million dividend to its lone shareholder, TowerBrook, an SEC filing said.
TowerBrook is offering 11.67 million shares in the J. Jill IPO. This will reduce its stake in the retailer to 60.4 percent. The firm is providing another 1.75 million shares through the green shoe, cutting its J. Jill holding to 56.9 percent.
At $15 a share, the midpoint of its IPO range, TowerBrook stands to make $201.3 million from the sale of roughly 11.67 million shares. Another $26.25 million is coming from the green shoe. TowerBrook’s remaining stake of 24.88 million shares is valued at about $373.2 million.
Including paper gains, TowerBrook stand to make about 4.02x its investment.
Executives for TowerBrook declined comment. J. Jill could not be reached for comment.
Action Item: Call CFO David Biese at +1 617-376-4300
Photo courtesy of J. Jill