‘Heist’ merchants or white knights? The private equity firm that owned David Jones

Dick Smith, 82, remembers going into David Jones as a small child to get new shoes. He remembers too being shocked when Anchorage Capital Partners bought the business in 2023 after what the entrepreneur views as its “heist” of his namesake electronics business about a decade before.

In 2012, an analysis from funds manager Forager suggested Anchorage had effectively bought Dick Smith Electronics for about $10 million in cash, ran down stock to make the chain look more profitable, and then listed it on the stock market at a $520 million valuation in 2013. It collapsed in 2016.

“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. “It’s amazing they went ahead and used Anchorage because of the history of it.”

This time though, Smith says, it looks like Anchorage has failed to execute its playbook. That playbook, in theory, is simple: Anchorage buys struggling businesses, strips out the bad bits, invests in the good bits, and sells them off. As Anchorage’s decision to put David Jones into administration this week shows, the reality is much harder.

Founded in 2007 by bankers including its executive chair Phil Cave, Anchorage runs lean. The core team listed on its website numbers just 15 people, but it has managed more than $1.5 billion over four funds and co-investments.

In a detailed statement, a spokesman for Anchorage argues its ownership of David Jones, which the company bought for less than $100 million as department stores struggled against online disruption and changing fashion trends, was a period of neither profligacy nor parsimony.

“Anchorage did not strip value from David Jones,” the spokesman says. “It invested capital, charged no fees, took no dividends, and backed a serious attempt at renewal under difficult conditions.”

In particular, the spokesman claims, 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. It spent on a better loyalty program, website and fitouts; took no director fees; and secured an additional $74 million investment last year to help secure stock.

”No dividends have been taken and all available cash ($150 million) was reinvested in the business,” the spokesman says.

At the same time, the spokesman says, 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, which is a common measure of annual performance on paper, and 2.6 times invested money back.

Among the companies it has owned is Brand Collective, which is responsible for classic Australian brands such as Volley shoes and selling international brands including Clarks. Anchorage built up the business in 2014 and 2015, improved its online sales, and sold it in 2021 to Melbourne billionaire Larry Kestelman’s family office. His representatives did not respond to an interview request, but Brand Collective has continued to grow and Kestelman has been reported as a potential buyer for David Jones.

Other Anchorage turnarounds have had a more mixed picture after its ownership. The private equity firm bought fast food chain Burger King’s New Zealand franchise in 2009, sold it to an even bigger international private equity outfit called Blackstone in 2011, which attempted to on-sell it multiple times before the franchise went through administration and was eventually picked up by another local franchisor.

Another former Anchorage company, childcare chain Affinity Education, received a wave of negative headlines in 2025 amid the industry’s child safety scandal. That disaster happened years after Anchorage had sold the chain in 2021 to Quadrant Private Equity, though.

Anchorage’s spokesman makes the same point about Dick Smith’s collapse. “Anchorage exited well before the company’s subsequent difficulties,” the spokesman says. “Anchorage was fully exonerated following a lengthy ASIC investigation and related class actions.”

(Smith too was long gone from his electronics store when Anchorage bought it. He had sold in 1982.)

Anchorage’s peers hold it in regard. Well-run businesses in good markets don’t end up in Anchorage’s hands, notes a rival investor. And what others may view as sharp practice, such as rejecting an offer for better rental terms from Westfield operator Scentre Group and putting the company into administration, they see as part of a valuable commercial toolkit to save the business.

“In our space, [Anchorage] is well respected,” says one senior insolvency partner who is familiar with Anchorage’s work and spoke on condition of anonymity. “They’re shrewd operators, they’re smart people and if there’s an opportunity to use a process to force an outcome they’ll do it.

“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.”

That could allow David Jones to jettison expensive retail leases for unprofitable stores – which Anchorage says was costing it 40 per cent of turnover – and clear out debts, before returning to regular business under a new owner or even a second period under Anchorage.

The insolvency partner is confident Anchorage has war gamed the insolvency process in conjunction with Hilco, the retail lender of last resort that had been backing David Jones. But, he says, the Dick Smith imbroglio has not been forgotten.

“That will play on their mind,” he says. “They didn’t come out of that smelling of roses.“

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