Comet’s fall fails to stem bargain-hunt

©FT

Just two months after the collapse of Comet, the electrical retailer his firm bought for £2, private equity boss Henry Jackson is again scouting for bargains in the troubled British retail sector, apparently undeterred.

This time, however, the interest in HMV stores is driven largely by the management of Game, one of the companies Mr Jackson owns, rather than the American financier himself, says Game chief executive Martyn Gibbs.

Mr Jackson, who once headed Deutsche Bank’s European consumer and retail group, founded London-based private equity firm OpCapita – previously known as Merchant Equity Partners – in 2006.

The firm, which only invests in retail consumer and leisure businesses, does not disclose the amount of funds it has under management. It raises money on a deal-by-deal basis from private investors.

Mr Jackson was criticised in December over Comet’s failure, with OpCapita in line to recoup £50m from the company while the government faced a £50m bill.

OpCapita had also negotiated a £50m dowry from Comet’s former owner, Kesa – now known as Darty – and continues to own the retailer’s warranties business, which is not in administration.

The controversy prompted The Sun newspaper to label the financier Henry “Jackpot” Jackson. Vince Cable, the business secretary, started an investigation into the circumstances of the failure, which resulted in the loss of almost 7,000 jobs.

Comet is not the first controversy involving OpCapita and its predecessor firm. Merchant Equity acquired furniture chain MFI in October 2006 with a £130m dowry. MFI was put up for sale in the summer of 2008, and sold that September. By November, the chain had gone into administration.

However, Mr Jackson, whose offices are in London’s upmarket Sloane Street and who lives in Chelsea with his glamorous Canadian wife Stacey and four children, staunchly defends his business strategy.

“[Some] think we are cowboys, in the way we are buying businesses, because we are buying businesses that they look at and think ‘that business should not exist’. Well, actually, we spend a lot of time trying to make sure we believe the business should exist before we invest in it,” he told the FT last year.

“Then we protect ourselves and our investors by structuring the transaction in a way that we are extremely unlikely to lose money.”

Some of Mr Jackson’s investments are showing resilience.

Game, the video games retailer which OpCapita bought out of administration in March, had performed well over the crucial Christmas period, Mr Gibbs said.

“We had a very different picture to what we are seeing across some of the rest of the High Street, with sales being ahead of our expectations.” Its total market share in gaming was over 30 per cent, Mr Gibbs said. “We are not in any sort of casualty situation. We have over-delivered.”