Asda’s owners have approved a payout of £44 million even though the company has reported an “embarrassing” performance. This decision highlights the owners’ commitment to rewarding shareholders despite the supermarket chain’s recent challenges.
The private equity leaders behind Asda have allocated £44 million among themselves, even as the supermarket faces ongoing struggles.
Recent financial reports from London-based TDR Capital reveal that its 17 partners shared a total profit of £43.9 million for the fiscal year ending in March, up from £33.6 million the previous year. The top-earning partner received £2.9 million.
TDR Capital is primarily known as the owner of Asda, having acquired the supermarket in 2021 in partnership with petrol station entrepreneurs Mohsin and Zuber Issa. In November, TDR Capital bought out Zuber Issa’s stake, securing a controlling 67.5% ownership for the private equity group.
Since its debt-driven acquisition in 2021, Asda has struggled to remain competitive, partly due to rising interest expenses on its £6 billion in borrowings.
The supermarket’s market share has declined from 14.8% at the time of TDR Capital’s investment to 12.5% in the 12 weeks ending November 3.
In August, Lord Rose, who was Asda’s chairman at the time, described the company’s downturn as “embarrassing” in an interview with The Telegraph. He later assumed control of the company from Mohsin Issa. Last month, TDR Capital appointed Allan Leighton, who previously led Asda from 1996 to 2001, to oversee the supermarket’s operations.
While Asda stands as TDR Capital’s most prominent investment, it is merely one component of the firm’s extensive portfolio.
The London-based investment firm manages over £12 billion in assets, with investments that include private university BPP, gym chain David Lloyd, and the UK franchisee of Popeye’s restaurants, among others.
Not all of TDR’s ventures have been smooth sailing. The firm is currently facing a potential loss of more than £300 million after deciding to relinquish control of a Norwegian cruise company to a group of creditors. Under TDR’s stewardship, Hurtigruten’s debts have surged to €1.4 billion (£1.2 billion).
TDR Capital has stated that it fostered significant growth since acquiring Hurtigruten in 2014 but attributes the recent financial struggles to substantial disruptions caused by the pandemic.
In July, TDR injected £250 million into Stonegate, the owner of 4,000 UK pubs, including the Slug & Lettuce chain. This investment followed Stonegate’s warning of “material uncertainty” regarding its ability to continue operations while attempting to refinance £2.2 billion of its debt.
Founded just over two decades ago by former bankers Manjit Dale and Stephen Robertson, initially known as Tudor Dale Robertson, TDR Capital secured a significant portion of its first €550 million (£466 million) fund from American hedge fund magnate Paul Tudor Jones. His contribution led to the inclusion of the final surname in the firm’s name. Since its inception, TDR has successfully raised four additional funds, with the most recent totaling €4 billion.
