Jan 26, 2022 - Economy

Ames Watson lines up $250M for deals via Lids

NBA player Karl-Anthony Towns signs autographs at a Lids store.

Photo: David Dow/NBAE via Getty Images

Private equity firm Ames Watson is levering portfolio company Lids with a new $250 million term loan to finance the private equity firm's acquisitions, it said Wednesday morning.

Why it matters: The new funding will help Ames Watson, which has a mix of long-term holdings as well as VC and PE investments, consolidate the retail and apparel industries.

Quick take: Goldman Sachs' global co-head of consumer retail Ben Frost predicted to Axios that both sponsor-driven transactions and apparel deals would both be prevailing themes in 2022.

Between the lines: Ames Watson tells Axios that the proceeds, more specifically, could be used for acquisitions of either add-ons complimentary to Lids or purchases of standalone platforms.

  • It gives the firm the ability to buy businesses with more than a billion dollars in revenue or a number of smaller companies.
  • Ames Watson focuses mainly on DTC, but is open to B2B opportunities, it added.
  • It plans to deploy over $250 million on acquisitions in 2022 with at least $20-$30 million on passive investments.

Of note: Information also not included in the announcement is JPMorgan arranged the syndicated loan, while Wachtell, Lipton, Rosen & Katz served as the legal adviser.

Details: Ames Watson tells Axios that Lids has $1 billion in revenue, which is double what it was three years ago.

  • It plans to grow that business by hundred of stores over the next two-to-three years.
  • The firm, owned by Lawrence Berger and Tom Ripley and founded four years ago, now generates $1.6 billion in total revenue.
  • Portfolio companies include Lids, Fanatics Lids College and South Moon Under.
  • Past passive investments include Fanatics, Watchbox, Hungry and The House of LR&C.

The bottom line: "We are very much a Berkshire Hathaway model, so the goal is to grow, generate cash and use that cash to purchase interesting businesses that we can transform and grow," Ames Watson said in an emailed statement, adding that it's a long-term investor that doesn't expect to exit businesses.

Richard Collings authors the new Axios Pro newsletter on retail deals. Subscribe at AxiosPro.com.

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