12:15PM September 22, 2020

by Bridget Carter – Dataroom Editor

The private equity interests of Melbourne-based entrepreneur Larry Kestelman are believed to be close to striking a deal to buy the Australian fashion retailer Pas Group.

Mr Kestelman, who founded the internet company Dodo and owned the Melbourne United basketball team, had earlier been a shareholder of the listed Pas Group, and moved to block a takeover bid of the company in 2015 by Coliseum Capital with his 10 per cent stake.

He chairs the Melbourne-based private equity firm Queens Lane Capital and his business interests span across a range of sectors including technology and property.

It comes after speculation emerged last month that a high net worth family was circling Pas Group.

Pas was placed in voluntary administration on May 29 and is now under the control of PwC.

It owns a raft of high-profile fashion brands such as Review Clothing, Jets, Black Pepper and Yarra Trail, but since being in administration, the company has sold off its Jets swimwear business.

As well as fashion brands, Pas Group owns Designworks, which is a supplier and marketer of owned, licensed and private label products, operating under categories such as apparel, footwear and equipment.

Its customers include companies such as Target and Kmart, Myer, David Jones and Big W.

The plan had been to find a buyer for all of Pas, rather than embark on a break-up.

For the 2019 financial year, Pas Group generated a $1.8m annual net profit and $272.6m of sales.

Expectations are that the earnings from the Designworks business will grow even more in the years ahead as struggling retailers look to outsource more of their design functions to drive down costs.

While listed, the company was earlier 65 per cent owned by private equity firm Coliseum Capital, based in Connecticut, that was co-founded by Adam Gray, who is the chairman of Australian traffic technology company Redflex.

At that time it launched its takeover bid, Coliseum was offering $86m for the retailer, or 63c a share, but the offer was rejected.

The private equity firm has made efforts to bulk up the business with further acquisitions, at one stage looking at retail fashion group Sussan, so that it could stage an exit.