Patisserie Valerie saved by Irish investors

Irish private equity firm Causeway Capital Partners has bought troubled bakery chain Patisserie Valerie, which collapsed into administration earlier this year following on from the earlier discovery of a £40m accounting fraud

KPMG, the joint administrators of parent company Patisserie Holdings and its subsidiaries, announced that the businesses of Patisserie Valerie and Philpotts have been sold in two separate transactions, which collectively preserve all 117 stores and safeguard approximately 2,000 jobs.

A total of 96 Patisserie Valerie stores have been acquired by Dublin-based Causeway Capital.

Separately, A.F. Blakemore & Son, the food retail, wholesale and distribution company, has acquired all 21 Philpotts stores across the UK.

All members of staff across the Patisserie Valerie and Philpotts chains will transfer to the respective purchaser with immediate effect.

The joint administrators confirmed that further announcements regarding the Baker and Spice business will be made in due course.

David Costley-Wood, partner at KPMG and joint administrator, said: ‘To have been able to secure the future of the majority of the Patisserie Valerie and Philpotts business, along with such a significant number of jobs, all against a challenging backdrop, is really pleasing.

‘It was clear from the outset of our appointment that the loyalty shown in the brands from their very many customers was a significant factor in ensuring that these businesses would remain part and parcel of our high streets.’

Turnaround specialist Steve Francis, who joined Patisserie Valerie as CEO in November following the departure of Paul May, will stay on to head up the management team for the business.

He said: ‘We are delighted to welcome Causeway Capital as our partners in Patisserie Valerie, ending a disruptive period of uncertainty for the business.

‘The affection and loyalty for the brand among our customers and employees, and Causeway Capital’s enthusiasm and support for the business, creates for us the foundations for an exciting future for the business.’

In a tweet, Causeway Capital said: ‘Patisserie Valerie is a heritage brand, much loved by its loyal customers. We are delighted to partner with the team and look forward to helping the business return to growth.’

The Dublin-based fund  currently owns some cafes within its portfolio, including BB Bakers & Baristas, which controls 65 stores in the UK and Ireland.

In January KPMG was appointed as administrators to  Patisserie Holdings, which had been experiencing financial turmoil since the discovery of accounting irregularities at its high street café chain last October.

Patisserie Valerie said an internal investigation had found these involved ‘very significant manipulation of the balance sheet and profit and loss accounts’, including thousands of false entries into the company's ledgers.

KPMG announced the closure of 70 stores and concessions, while continuing to trade 121 stores while they assessed options for the business.

The Financial Reporting Council (FRC) is investigating Grant Thornton’s audit of the financial statements of Patisserie Holdings for the years ended 30 September 2015, 2016 and 2017 under its audit enforcement procedure.

The regulator is also conducting an investigation under the accountancy scheme into Patisserie Valerie’s former CFO, Chris Marsh’s preparation and approval of Patisserie Holdings Plc’s financial statements and other financial information provided by Marsh.

Report by Pat Sweet

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