Lion Capital styles deal for ghd

Big cats aren't noted for their curly manes, but British buyout shop Lion Capital LLP is letting its hair down with the £300 million ($401 million) purchase of hair-straightening tools brand ghd and its parent company Jemella Ltd.

The deal teases out a 3 times money return for seller Montagu Private Equity LLP, which bought the company for £160 million from Lloyds TSB Development Capital in 2007.

Ghd stands for "good hair day" and sells styling irons and other hairdressing products through hair salons for professional and consumer use. Its current advertising campaign is fronted by the pop singer Katy Perry. It claims to have "re-invented the professional hairstyling tool market in 2001" with the launch of its styler "replacing flat irons, straighteners and curlers with a professional styling tool designed for salon use that could also be used easily by women in the home."

Based in Leeds, England, the company has grown under Montagu's ownership, doubling profit to £32 million. Sales have increased from £70 million in 2006 to more than £150 million today. It has also moved from being a one-product business to a company with a range of electrical hair-styling tools and established an in-house team of 24 engineers and product designers with a pipeline of new devices.

Like Lloyds before it, Montagu had said upon investing in the company that it planned to increase sales and develop the company's existing international footprint of Australia, South Africa, North America and several European countries. It had backed the development of an e-commerce site that now delivers a third of ghd's profits. Lion Capital plans to do more of the same, especially with an eye to further expansion in the U.S. and Europe, and an even greater focus on digital sales.

"We look forward to working closely with the management team to accelerate growth in the business through increased investment behind the brand, new product development and expansion of both international and alternative sales channels, in particular online," Lion Capital partner Lyndon Lea said in a statement.

Lion will fund the acquisition with financing from Lloyds Banking Group plc, but declined to give further details on the structure of the deal.

Lion, a consumer and food products-oriented investor with stakes in brands such as Weetabix breakfast cereal and Jimmy Choo shoes, also holds a stake in frozen food company Findus Group Ltd. Findus has been in the news after some of its beef products were found to contain significant quantities of horse meat. Findus has recalled the offending products and has already threatened to sue its suppliers, but is still fighting for its reputation. However, in an effort to distance his private equity firm from the problems facing the company, Lea has called on Findus management to make a statement and clarify its position, saying the public has a right to know what it is going on.

Lion Capital now owns only 33% of Findus, after a restructuring last year that brought in a mezzanine consortium of Highbridge Capital Management LLC's private equity and credit investment arm, Highbridge Principal Strategies, JPMorgan Chase & Co. and Northwestern Mutual Capital as the majority investors.

Montagu and ghd were advised by Ernst & Young LLP and Nick Roome and Stephen Devlin of law firm DLA Piper. Lion Capital was advised by Akeel Sachak of Rothschild and Stephen Davies of SJ Berwin LLP.