N Brown Group agrees to £191 million takeover

AIM-listed N Brown is suffering from the lack of fund manager appetite for smaller stocks, said the bidding company

British online retailer N Brown Group agreed to a £191 million takeover led by its majority shareholder in a take-private deal, the latest sign of a slump in the country's public markets for smaller firms.

AIM-listed N Brown, one of the country's top 10 online clothing and footwear retailers which owns the JD Williams, Simply Be and Jacamo brands, is suffering from the lack of fund manager appetite for smaller stocks, said the bidding company.

Britain's stock market has struggled in recent years as some larger firms have opted for a U.S. flotation over London, while smaller listed companies have borne the brunt of a collapse in demand by institutional and retail investors, as per recent research.

N Brown has been a public company for 50 years, originally selling clothes via catalogues. But the vehicle set up by Joshua Alliance - part of the wider Alliance family who, in aggregate, own more than 60% of the company - to take it private said its listing was costly and no longer made sense.

In light of N Brown's current shareholder structure and very low trading liquidity, and the limited UK fund manager appetite for small cap consumer stocks, N Brown is not benefitting from being listed, according to the statement on Thursday.

Billionaire Mike Ashley's retail firm Frasers Group owns 20% and supports the takeover.

Illustrating the scale of the challenge for smaller companies, think tank New Financial said UK smaller company funds have recorded a 36th successive month of outflows while smaller company market debuts slumped by 80% to just 22 over the past decade.

N Brown shareholders will get 40 pence per share in cash, a 48% premium to the closing price on Wednesday. Shares in N Brown opened up 43% to 38.5 pence after the announcement of the recommended acquisition.