KCP becomes part of the furniture with Dwell

Independent private equity house, Key Capital Partners (“KCP”), which has offices in Birmingham, Cambridge and Leeds, has provided expansion financing to contemporary furniture and home accessories retailer, Dwell (“Dwell” or “the Company”), with a £5 million equity investment.

The investment from KCP will support the significant expansion of Dwell’s store estate as the company plans to launch 33 new high street outlets over the next four years – taking its total number of UK stores to 52 by 2014.

Dwell, the UK’s fastest growing furniture retailer, creates and retails furnishings that combine aspirational design with affordable pricing, and has carved a niche targeting affluent young professionals. Originally, founded as a mail-order furniture business in 2003 by entrepreneur Aamir Ahmad, the company has grown from a single store in Balham, London, into one of the UK’s most fashionable multi-channel furniture retailers.

Dwell currently has 19 stores, including its recently opened flagship location on Tottenham Court Road, London, and concessions in leading department stores, Selfridges and House of Fraser.

Total sales from the company’s high street, online and catalogue channels totalled over £25 million in the year to 31 January 2010. During the year, the company made a significant investment in its senior management team in order to drive its four-year expansion strategy, boost operational efficiencies and enhance profitability.

Neil McCausland, current chairman of Kurt Geiger, TJ Hughes and Skin Clinics, was appointed as chairman, while Simon Tutt joined as finance director, having previously held roles at women’s fashion provider Elvi and furniture retailer Harveys. Robyn Clifford, former head of buying and merchandising for own brand products at luxury department store Harrods, also joined as buying and merchandising director.

Following these key hires, the implementation of new finance and merchandising processes saw turnover increase by 15 per cent in the last six months of FY10, following a challenging first half.

The KCP team comprised partners, Owen Trotter and Andy Gregory. Trotter, who joins the board of Dwell as non-executive director, said: “The challenges facing UK retail over the last two years have been well documented, but Dwell has emerged from the turbulence in a far stronger position due to its first class management team and proven product offering.

“The business is performing strongly and we look forward to working with Aamir to expand the business significantly over the coming years, in line with its ambitions.”

Aamir Ahmad, founder and managing director of Dwell, said: “This capital injection from KCP represents the next milestone in Dwell’s development, having strengthened the management team last year in anticipation of both this investment and our aggressive four-year growth strategy.

“KCP will prove to be a key strategic partner as we look to boost brand awareness and expand the business, beginning with five new stores in the UK in 2011. The timing is perfect for expansion, both in terms of the life cycle of the business and conditions in the commercial property sector, where pricing is currently extremely competitive.”

Dwell was advised on the transaction by the consumer markets team at Clearwater Corporate Finance, which comprised, partner Marc Gillespie, director Gareth Iley, assistant director Richard Shaw, and retail analyst Jackie Naghten. Gillespie said: “Dwell is a rarity in its field, in that it is a true multi-channel retailer that performs equally strongly across its high street, online and catalogue channels. As a young chain with fast growth potential, it is testament to Dwell’s leadership and unique market position that it has secured the backing of a supportive private equity investor in such a challenging financial market.”

A team from Cobbetts LLP, comprising partners, Sean Fitzgerald, Adrian Cutler, and director Victoria Zivkovic, provided legal advice to KCP. Partner Graham Elsworth and assistant director Louise Chubb from the Birmingham office of BDO provided KCP with financial due diligence. Javelin’s COO, Richard Wolff, and director Michael Fine provided commercial due diligence, while Paul Quinn of the Quinn Partnership provided management due diligence. Insurance due diligence from Heath Lambert was provided by practice leader, Victoria Railton.

Partner Tim Hewens and solicitor Alastair Francis at Hammonds provided legal advice to Dwell, while Miriam Lampert provided employment law advice.