Comet: another OpCapita kiss of death

Henry Jackson is developing a bit of a reputation. The ex-banker and founder of OpCapita, is set to send yet another business he owns into administration, despite being expected to make a profit in the process.

At the time of the deal, OpCapita said it would ensure Comet was run as 'a going concern' for 'at least 18 months'. That was 14 months ago

 

The collapse of Comet, the electrical goods retailer, has raised questions about Jackson’s business practices and the way in which OpCapita pinpoints companies and extracts a return even when they don’t survive.

In 2006 Jackson made his debut acquisition for just £1 - furniture retailer MFI. He was backed by Cerberus, the American hedge fund and Goldman Sachs. But within two years MFI had crashed with £145m of debts.

Earlier this year, when speaking to The Daily Telegraph, Jackson described MFI as a “success”. “MFI did very well for all the investors,” said Jackson, whose website also says the investment was exited with a “profit”.

In fact, insolvency documents show that Jackson and his investors were secured lenders, receiving preferential treatment in collapse. Goldman Sachs came away with the biggest pay cheque from the administration while Jackson and his company - formerly called Merchant Equity Partners - pocketed the next biggest windfall of £3.2m.

MFI’s previous owners had left Jackson with a “dowry” payment of £60.6m and left £51.9m of customer deposits. Nevertheless, Britain’s biggest furniture store saw part of its credit insurance withdrawn and, not long afterwards, Jackson off-loaded the company to management. Within months it was in administration.

Jackson, whose grandfather founded men’s magazine Esquire in the US and whose wife Stacey is a self-styled pop star, denies that OpCapita withdraws fees from companies he owns - leaving them short of desperately needed working capital.

Industry rivals claim OpCapita charges a series of opaque “consultancy fees” and “finance fees” in order to extract money. But Jackson says he charges less than most other private equity firms.
According to public records, Jackson who lives and works in Chelsea, is a director of 14 businesses. But most do not have accounts or are junior to parent companies in Jersey, whose records are not available publicly.

Last year, when Jackson bought Comet, it was with a £50m dowry from Kesa, the former parent. He also had £30m in equity from investors, plus a £40m asset-backed loan facility.
At the time of the deal, OpCapita said it would ensure Comet was run as “a going concern” for “at least 18 months”. That was 14 months ago.