Maximising return for shop founder

The founder of 34-store retail chain Max Fashions, David Wright, has sold most of the business to a group led by private equity and venture capital investor Direct Capital.

The price has not been disclosed.

Investors put in about $11.3 million but the larger part of the price was funded from bank debt secured against the women's clothing retailer.

Senior staff including Wright - who launched the business in 1985 - have kept 12.3 per cent of the business, which is reported to employ 250 full and part-time staff.

The other investors are:

* A Direct Capital fund with a 37.6 per cent stake.

* Pohutukawa Private Equity (a retail private equity fund), 31.7 per cent.

* Accident Compensation Corp, 11 per cent.

The balance - 7.4 per cent - went to unnamed co-investors.

Wright is from the family that founded Hugh Wright's - the menswear chain that toppled into receivership in 2002 - and, despite roles in events such as Fashion Week, is not one for publicity.

A profile in the Weekend Herald's canvas magazine in 2003 said: "Getting answers out of him is as laborious as getting a really bad wine stain out of your favourite cream-coloured wrap-around skirt."

He had not returned a call from the Business Herald yesterday.

It is understood media releases about the deal were posted on the websites of the New Zealand Venture Capital Association and Pohutukawa this month - but not sent to media.

In one of them, Wright says Direct Capital's investment will help the company to grow and acquisitions are possible. "This is a very positive development for Max."

Direct Capital says Max is "one of New Zealand's pre-eminent women's apparel labels' for the 18-to-35 age group. Head office is in Auckland.

Terming the deal a "succession management buyout", Direct Capital says Wright will stay on as managing director for at least a year and then become executive chairman.

Max is the first investment for Pohutukawa, a fund launched by ABN AMRO Craigs and Direct Capital for retail investors to put money into unlisted companies.