Isis set to land £20m in Fat Face market listing

EDINBURGH firm ISIS Private Equity is expected to scoop a £20m windfall from its stake in the clothes retailer Fat Face, which is due to come to market.

The ski-wear and extreme sport specialist is considering a 65m flotation which would value ISIS’s 40% holding in the business at about 25m - five times its original investment of just 5m, made in 2000.

ISIS’s shares in Fat Face are split between a number of its quoted investment funds. Because the clothing retailer is a private company, ISIS values its shares at a very low multiple of earnings.

But if the retailer floats, the value of ISIS’s stake will soar, providing a welcome boost to a number of its quoted funds.

Mark Advani, head of new investments at ISIS, said: "Fat Face is a fabulous company and has exceeded growth expectations every year since our initial investment."

He declined to comment on the likely value of ISIS’s stake in Fat Face following a flotation. However, one retail analyst said: "If you valued Fat Face against a member of its listed peer group, such as French Connection, a value of 65m is reasonable."

Fat Face began investigating a stock market debut last year. Last week it reported that half year sales topped 21m, compared with 13m a year earlier. Pre-tax profits rose to 2.3m from 1.3m in 2002.

Excluding new stores, like-for-like growth soared by 18% but Christmas sales rose only marginally by 1% in the seven week festive trading period.

Any flotation would also make millions of pounds for the retailer’s founders Tim Slade and Jules Leaver - two self confessed ‘ski-bums’.

Since the pair conceived the idea for Fat Face while on a skiing holiday in 1993, the chain has grown to 76 shops in the UK, France and the Channel Islands. According to the company’s website, it was born when Slade and Leaver started selling T-shirts from a rucksack to pay for their extended off-piste adventures.

The company has opened 13 stores in the past year and a sizeable number more are in the pipeline - including an outlet in St Andrews. A store in Inverness opened recently.

Other openings are planned for Gatwick Airport and the company’s first Irish shop in Dublin. The retailer’s aggressive expansion is being led by chief executive Louise Barnes, who was hired from Monsoon last year.

A spokeswoman for the company confirmed a flotation was on the cards. "All options are being looked at," she said.

Despite its ‘extreme sports’ origins, Fat Face is rapidly becoming the label of choice for well-heeled urbanites. Its shop in Edinburgh is a favourite for New Town university students looking for fleece tops and baggy snowboarding pants.

The retailer also has a strong mail order business and has carved a lucrative niche supplying team tops for sports clubs.

But the popularity of the company’s clothes among older people and those who have never seen a snowboard, has led to concerns that the brand is losing its ‘ski-cred’ with the young and trendy.