Poundland set for era of growth after £200m private equity deal

The group, which has 17 stores in Yorkshire and the Humber, is keen to open another 60 to 70 sites this year.

Poundland's chief executive Jim McCarthy said: "Our new partnership with Warburg Pincus will enable us to accelerate our growth plans and bring the single price proposition to even more customers throughout the UK."

He added that the new stores will create more than 2,000 jobs. The group is planning to open new sites in Pontefract and Halifax this year.

Poundland, which currently has 261 stores across the UK, said the new stores would be scattered throughout the UK with an average sales area of over 6,000 square feet.

Some larger store formats are also planned.

It believes there is scope for up to 800 UK stores.

Mr McCarthy, who will continue to run the company, said that new owner Warburg Pincus sees significant opportunities for future growth.

"We see an increasing number of consumers who are seeking value for money whilst not compromising on quality," he said.

Current owner private equity firm Advent International said the deal was "fantastic" for the company and its 7,000 employees.

Poundland is Europe's largest single price discount retailer.

The firm has performed well in the economic downturn as cash-conscious shoppers sought out bargains.

Discount chains have also benefited from the collapse of Woolworths.

Retail research group Verdict estimated that discount chains took about 60m of sales from the collapsed retailer.

Poundland's sales in the year to March 31 rose by a quarter to 510m and the firm said it expects to generate revenues above 700m in 2011.

Advent said the 1 model is resilient both in periods of recession and economic growth.

The company said the UK discount retail market is worth around 24bn and is expected to grow a further 22 per cent by 2014, exceeding nearly every other retail sub sector.

The group has trebled its customer base since being bought by Advent as part of a management buyout in 2002.

Warburg Pincus is acquiring a majority stake while the management of Poundland, led by Mr McCarthy, retains a minority shareholding.

The deal adds to a flurry of private equity transactions in the British retail sector in recent months.

Last month Advent purchased Doncaster-based sofa retailer DFS for about 500m, while Bridgepoint acquired art and craft retailer HobbyCraft for about 100m.

In January Kohlberg Kravis Roberts bought Pets at Home for about 955m

Mr McCarthy was previously managing director of Sainsbury's convenience stores and chief executive of T&S stores.

Poundland's chairman Colin Smith has more than twenty years experience of food retailing.

Prior to joining the group, he was finance director and then chief executive of Safeway.

The acquisition of Poundland is an all equity investment, fully funded from Warburg Pincus Private Equity X, a $15bn global private equity fund.

Warburg Pincus managing director Steve Coates said: "Poundland is an exceptional business which enjoys a leading position in the high growth single price discount retailing market in the UK.

"The company is well placed to continue to take advantage of excellent growth opportunities."

Mr McCarthy said: "Our rapid expansion is a reflection of the Poundland shopping experience and the great support our valued customers give us.

"We look forward to creating over 2,000 jobs and welcoming many more savvy customers in new locations in 2010."

The original pound shop

Poundland was established in April 1990 as the original 1 discount retailer.

It offers a range of more than 3,000 products at the single price of 1 each.

The group sells 1,000 brands including Maxwell House coffee, Whitworths sugar, Colgate toothpaste, Walkers crisps & snacks and Kodak batteries.

Around two thirds of the products it sells are sourced from the UK.

Last year Poundland sold 3.5 million boxes of Tetley tea bags, four million bars of Toblerone, four million jars of coffee, five million energy drinks, three million Christmas crackers, 2,250 miles of tinsel, 1.5 million pairs of reading glasses, 1.7 million umbrellas, one million toy cars, 4.5 million energy saving light bulbs, 21 million metres of aluminium foil, 185 million batteries and 500,000 garden gnomes.