Modella Capital, the private equity firm behind Hobbycraft, has successfully acquired The Original Factory Shop, a move set to reshape the UK discount retail landscape. The deal, which includes all 180 stores and approximately 1,800 employees, comes after negotiations with Baaj Capital, owner of In The Style, faltered last week.
The acquisition signals the end of a 17-year tenure under private equity firm Duke Street, which had been exploring a sale for several years. Duke Street had previously enlisted Deloitte in 2023 and, more recently, Teneo in December to oversee the process.
Modella’s purchase was a last-minute bid, edging out potential interest from Frasers Group, owned by Mike Ashley, and Fortress, which owns Poundstretcher and Majestic.
The Original Factory Shop has faced financial challenges in recent years, reporting a pre-tax loss of £1.7 million for the year ending March 26, 2023, a stark contrast to its previous year’s profit of £1.4 million. Sales also declined by 4% to £118 million.
This acquisition adds to Modella Capital’s expanding retail portfolio, following its purchase of Hobbycraft and its 119 stores in August last year. Industry experts are closely watching how Modella plans to integrate The Original Factory Shop into its growing portfolio.
