The private equity firm that owned David Jones has said it did not strip value from the department store, with a spokesman defending its record as the company enters administration. Entrepreneur Dick Smith questioned whether Anchorage’s involvement would be another ‘equity heist’, after viewing the firm’s earlier ownership of his namesake electronics chain as a heist.
Anchorage bought David Jones for less than $100 million in 2023 as traditional department stores battled online disruption and changing fashion. Entrepreneur Dick Smith, whose namesake electronics chain Anchorage owned before its 2016 collapse, told this masthead he was shocked by the purchase. "When I heard they were involved in David Jones I thought, as many Australians will, will this be another equity heist?" Smith said. "It's amazing they went ahead and used Anchorage because of the history of it."
An Anchorage spokesman detailed the firm’s investment in David Jones. The firm argued it invested capital, charged no fees, and took no dividends, backing what it called a serious attempt at renewal under difficult conditions. It claimed David Jones put $18 million more into its stores than rival Myer in the last two years, despite having 18 fewer locations. The spokesman said David Jones spent on a better loyalty program, website and store fitouts, and secured an extra $74 million investment last year to help secure stock.
The spokesman said all available cash, which he put at $150 million, was reinvested in the business. Anchorage’s performance for its own investors was described as in the top quartile of comparable funds, generating a 36 per cent internal rate of return over 20 years.
The firm has managed other well-known brands, including Brand Collective and the Burger King New Zealand franchise. A senior insolvency partner, who spoke anonymously, said Anchorage was well respected in its field and described its operators as shrewd, saying they would use a process to force an outcome if an opportunity arose. “I'm sure they would've rather avoided it, but it's a rescue tool and it should be used as such to reposition an old school-type asset,” the partner said. The partner said the Dick Smith imbroglio had not been forgotten. “That will play on their mind,” he said. “They didn't come out of that smelling of roses.”
The Anchorage spokesman said the firm had exited Dick Smith well before the company’s subsequent difficulties and had been fully exonerated following a lengthy ASIC investigation and related class actions. David Jones is expected to close many of its 38 stores and make thousands of staff redundant. Melbourne billionaire Larry Kestelman, whose family office bought Brand Collective from Anchorage, has been reported as a potential buyer.
Analysis
Why This Matters
- The collapse of the 185-year-old retailer means thousands of job losses and a major shake-up of Australian city retail.
- The fate of iconic Australian brands in the hands of private equity is now a central public debate, with the Dick Smith precedent looming large.
- Suppliers left unpaid by the administration are pressing for answers, and the process could set a significant precedent for retail insolvencies.
Background
Anchorage Capital Partners was founded in 2007 by bankers including executive chairman Phil Cave. The firm operates with a lean core team and has managed more than $1.5 billion across four funds. It specialises in buying struggling businesses, restructuring them, and selling them for a profit. Its past investments include Brand Collective, the Burger King New Zealand franchise, and childcare chain Affinity Education.
Key Perspectives
Dick Smith: Characterises Anchorage's involvement as an 'equity heist', recalling how the firm's playbook preceded the 2016 collapse of his namesake electronics chain.
Anchorage Capital Partners: Insists it invested significantly in David Jones, charging no director fees and taking no dividends, and that all available cash was reinvested into the business in a genuine turnaround attempt.
A senior insolvency partner: Views Anchorage as a respected but aggressive operator that uses administration as a legitimate rescue tool, though notes the Dick Smith episode remains a reputational problem.
What to Watch
- The scale of expected store closures and job losses under administration.
- Whether Larry Kestelman or another party emerges as a buyer for the remaining assets.
- The outcome of any legal challenges from suppliers who remain unpaid.
Checked
12 claims in this story checked against 1 source: 11 supported.
Show each claim
- SupportedAnchorage defends its record as David Jones enters administration.Brisbane Times - Latest News: “In a detailed statement, a spokesman for Anchorage argues its ownership of David Jones”
- SupportedDick Smith questioned whether Anchorage’s involvement would be another “equity heist”.Brisbane Times - Latest News: ““When I heard they were involved in David Jones I thought, as many Australians will, will this be another equity heist?” Smith tells this masthead.”
- SupportedAnchorage says it invested capital, charged no fees and took no dividends.Brisbane Times - Latest News: ““It invested capital, charged no fees, took no dividends, and backed a serious attempt at renewal under difficult conditions.””
- SupportedSmith said, “When I heard they were involved in David Jones I thought, as many Australians will, will this be another equity heist?”Brisbane Times - Latest News: ““When I heard they were involved in David Jones I thought, as many Australians will, will this be another equity heist?” Smith tells this masthead.”
- SupportedSmith said, “It's amazing they went ahead and used Anchorage because of the history of it.”Brisbane Times - Latest News: ““It’s amazing they went ahead and used Anchorage because of the history of it.””
- SupportedAnchorage bought David Jones for less than $100 million in 2023.Brisbane Times - Latest News: “the company bought for less than $100 million”
- Partly supportedDavid Jones put $18 million more into its stores than Myer in the last two years.Brisbane Times - Latest News: “David Jones put $18 million more money into its stores than Myer under the last two years of Anchorage’s ownership, despite having 18 fewer locations.”
- SupportedDavid Jones secured an extra $74 million investment last year to help secure stock.Brisbane Times - Latest News: “secured an additional $74 million investment last year to help secure stock.”
- SupportedThe spokesman put all available cash reinvested in the business at $150 million.Brisbane Times - Latest News: ““No dividends have been taken and all available cash ($150 million) was reinvested in the business,” the spokesman says.”
- SupportedAnchorage’s performance for its own investors was in the top quartile of comparable funds, generating a 36 per cent internal rate of return over 20 years.Brisbane Times - Latest News: “Anchorage’s performance for its own investors has been in the top quartile of comparable funds, generating a 36 per cent internal rate of return over 20 years”
- SupportedThe insolvency partner said, “I'm sure they would've rather avoided it, but it's a rescue tool and it should be used as such to reposition an old school-type asset.”Brisbane Times - Latest News: ““I’m sure they would’ve rather avoided it, but it’s a rescue tool and it should be used as such to reposition an old school-type asset.””
- SupportedDavid Jones is expected to close many of its 38 stores and make thousands of staff redundant.Brisbane Times - Latest News: “David Jones is expected to close many of its 38 stores and make thousands of staff redundant.”