Would ADIC and Ontario Teachers Approve of a Neiman Marcus Takeover?

North American luxury department stores are struggling for a variety of reasons including the hegemonic demise over high-end products thanks to e-commerce businesses and consumer spending habits.

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Neiman Marcus Group LLC, the luxury retailer store business, is up for sale, according to various media reports including The Wall Street Journal. Neiman Marcus is owned by private equity giant Ares Management LP and the Canada Pension Plan Investment Board (CPPIB). Did these institutional investors pile on too much debt? Can they salvage their massive investment in Neiman Marcus? In March, Neiman Marcus hired investment bank Lazard Ltd to help optimize the retailer’s balance sheet and possibly consider restructuring its debt profile.

Ares, through its private equity funds Ares Corporate Opportunities Funds III and Ares Corporate Opportunities Funds IV, and CPPIB acquired Neiman Marcus in a leveraged buyout (LBO) for a purchase price of roughly US$ 6 billion in 2013 from a group of investors led by TPG Capital and Warburg Pincus. The institutional buyers divided the ownership up equally with a portion going to company management at the luxury department chain. However, this LBO saddled Neiman Marcus with nearly double the debt.

Largest Shareholders of Hudson’s Bay Co

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