Australia Music Group gets private equity lifeline
Revere Capital has injected funding into Australia Music Group (AMG) as part of internal restructuring efforts. Like many retailers in Australia, the company is struggling during a period of poor consumer sentiment.
Tim Mason, joint managing director of AMG and retail management firm The Brackenbury Group, told media that the fresh capital will reduce the company's debt burden and enable it to keep moving forward. But he warned that significant price deflation in the retail sector continues to erode margins.
Several private equity-backed retailers have already gone to the wall. Fashion chain Colorado Group, a portfolio company of Affinity Equity Partners, went into receivership in May 2011, while Pacific Equity Partners-backed bookseller REDGroup Retail called in the administrators earlier the same year.
The latter firm, which owned bookstore chains Borders and Angus & Robertson, suffered the double blow of dwindling consumer sentiment and increased competition from online retailers with lower overheads shipping products from overseas. Mason added that the online threat to AMG wasn't significant, but that trading is still under pressure.
AMG operated the Billy Hyde Music stores and merged with Brackenbury-owned Allans Music in 2010. The combined entity has 28 outlets across Australia. Crescent Capital invested in AMG in 2008, building up a majority stake. The private equity firm sold its interest last year, reportedly at a loss of A$50 million.
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