Warburg Pincus cuts stake in British discounter Poundland-Reuters

(Reuters) – Private equity firm Warburg Pincus has reduced its stake in British discount retailer Poundland from 30.4 percent to 16.4 percent, it said on Wednesday, raising about 142 million pounds ($216 million) through a share placing.

Warburg Pincus had said on Tuesday that it planned to sell 25 million Poundland shares. However, it increased the size of the offering to 35 million shares because of strong demand for stock in Europe’s largest single-price retailer.

The stake was placed with institutional investors at 405 pence per share.

With recession-era shopping habits entrenched, discount retailers in both general merchandise and food are winning market share across the industry.
Shares in Poundland, which listed on the London Stock Market at 300 pence last March, fell by up to 6.7 percent on Wednesday.

Last Friday Poundland said it had agreed a deal to buy smaller privately-owned rival 99p Stores for 55 million pounds, subject to the approval of competition authorities, sparking a 15 percent jump in its share price. It intends to part-finance the purchase through an equity placing.

Despite reducing its Poundland holding, Warburg Pincus said it remained “a significant and supportive shareholder of the company, its management team and strategy”.

Warburg Pincus said it will not sell any more Poundland shares without the consent of JP Morgan Cazenove and Credit Suisse Securities, the joint bookrunners for the share offer, for a period of 90 days.

Poundland shares were down 5.2 percent at 395.1 pence at 0854 GMT, valuing the business at about 1 billion pounds.