Gutman, co-head of investment banking services for Europe, said that Goldman offered informal advice on the sale and highlighted that Retail Acquisitions’ Dominic Chappell had a history of bankruptcy, reports CityAM.
Gutman described his advice over the deal as “preliminary observations on proposals received from Retail Acquisitions”, but made it clear to the combined Work and Pensions and Business, Innovation and Skills committees that Goldman Sachs was never paid for its involvement.
Although Gutman had only one or two phone calls with Sir Philip Green, he had told Arcadia Group’s finance director Paul Budge that Chappell had a history of bankruptcies.
He said he had also indicated that the prospective buyer for BHS had no retail experience, and described Retail Acquisitions’ proposals as “very light on detail”.
In particular, Gutman said the proposal – as it was put forward in December 2014, four months before the deal took place – had no in-depth business plan and no indication of cash flows.
Retail tycoon Sir Philip Green sold BHS to Retail Acquisitions, which is majority-owned by Chappell, in March 2015 for £1.
When pushed on whether, in a hypothetical situation, Goldman Sachs would have advised against Retail Acquisitions as a buyer, Gutman said that the lack of detail was not necessarily a problem. He said the deal could have progressed, adding that he “didn’t know when the deal would close”, and that at such an early stage he would not have expected a detailed plan.
Goldman Sachs declined to provide formal assistance on the BHS sale “for commercial reasons”. When asked for clarification on what this meant, Gutman confirmed that the firm concluded the deal was too small.
Other advisers over the BHS sale to Retail Acquisitions that were present at the committee hearing included Linklaters’ partner Owen Clay and Steven Denison, partner at PwC.
When the MPs asked all three advisers why Retail Acquisitions was considered the preferred buyer for BHS, there was silence.
Lord Grabiner, chair of Arcadia’s owner Taveta Investments, later told the committee hearing that if a buyer had not been found for BHS it would have had to been put into administration.
He said he did not know that Chappell was not a reputable buyer, remarking: “I’ve never done the Google exercise myself.”
Speaking to the hearing, Paul Budge said he was aware of one of Chappell’s bankruptcies, but that Arcadia understood there would be £120m funding for BHS if the deal went ahead.
BHS was put into administration last month, with a pensions deficit worth £571m and placing 11,000 jobs at risk.