TDR Capital, Asda’s private equity owner, received a £44 million payout despite Asda’s ongoing struggles.
- Newly filed records show TDR’s partners shared a significant profit pot, marking an increase from the previous year.
- Asda has been facing a decline in sales, notably during the critical Christmas trading period.
- The supermarket also contends with a substantial £6 billion debt burden.
- Despite these financial hurdles, the highest earning partner received £2.9 million.
In a recent financial disclosure, it was revealed that TDR Capital, the private equity firm behind Asda, enjoyed a substantial £44 million payout. This payout is noteworthy given the ongoing challenges facing the supermarket chain. TDR Capital’s partners collectively earned a profit pot of £43.9 million, a noticeable increase from the previous year’s £33.6 million. The highest earning partner received £2.9 million, highlighting the firm’s profitable year despite Asda’s current difficulties.
TDR Capital has been an integral part of Asda’s ownership framework since acquiring a significant stake in 2021 alongside the Issa brothers. Earlier this year, TDR further solidified its control over Asda by acquiring Zuber Issa’s shares, bringing its total ownership stake to 67.5%. This increased control comes at a time when Asda is grappling with declining sales. According to market data from NIQ, Asda was the only major supermarket to experience a decrease in sales leading up to the Christmas period, resulting in a 1.1 percentage point drop in its market share to 12.1%.
The financial strain on Asda is not only reflected in its sales figures but also in its substantial debt load. The supermarket is managing a hefty £6 billion in debt, which adds another layer of complexity to its financial challenges. Despite these issues, the equity firm’s financial returns remain robust, as evidenced by the recent profit distribution.
The juxtaposition of Asda’s financial strain with the profitable outcomes for TDR Capital’s partners raises questions about the financial strategies being employed. While Asda contends with market pressures and debt obligations, TDR Capital’s financial health appears unaffected. This scenario underscores the complexities inherent in private equity ownership of large retail chains, particularly during turbulent market conditions.
Asda’s situation highlights the complex dynamics between private equity ownership and retail performance.
