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Footasylum: The nightmare investment that has been a nice little earner for founder's kids

Investors buying at the IPO price of 164p have lost more than three-quarters of their investment so far but the kids of Footasylum founder David Makin have pocketed millions
adidas trainers
Footasylum sells trendy trainers and trackies

Footasylum PLC’s (LON:FOOT) recent woes might have made the trendy ‘athleisure’ retailer a nightmare investment for some but for the founder’s children, it has been a nice little earner.

For David Makin’s three kids – one of whom is Clare Nesbitt, the company’s chief executive – have pocketed just shy of £25mln from the troubled group’s initial public offering last November.

On top of that, they still have a combined 57% stake in Footasylum worth just over £20mln. Granted, that figure would have been significantly higher just a few months back.

READ: Footasylum - is the runaway trainer ever coming back?

Shortly after it joined AIM, the stock was changing hands for more than 265p. Ten months and two profit warnings later and the share price has collapsed to 34p.

That slump has left a lot of investors well out of pocket. Those who bought in at the 164p stock market float price have seen 80% wiped from the value of their investment, while those unlucky enough to buy shares at December’s peak have lost the best part of 90%.

Nursing those sort of stock market-inflicted bruises, rank and file punters could be forgiven for being more than a little envious of the Makins’ good fortune.

Their windfall hasn’t come from their father David as you might expect. It actually comes from their dad’s business partner and close friend, John Wardle, with whom Makin senior founded JD Sports Fashion PLC (LON:JD.) back in 1981.

Wardle, estimated to be worth £50mln, is now 74 and has no children of his own to leave his millions to. Instead, some of his wealth is going to Clare, 31, and her two siblings, 28-year-old Tom, who is the company’s marketing and e-commerce director, and Amy, 30.

That’s because the former Manchester City chairman set up a trust via which he gifted them 44.5mln Footasylum shares, which at one point had a value of over £100mln.

READ: JD founders set for big payday as Footasylum plans AIM float

Some of those shares, worth around £14mln, were sold at the IPO last November, while the remaining stock is valued at £12.3mln.

They and Makin senior received a further £18.7mln when the company bought back preference shares that had previously been given to Wardle in payment of a loan.

At the same time, Makin gave his kids 22.5% of Footasylum’s stock, now worth £8mln, when he set the company up in 2005 and means they control 57% of the shares.

Their total stake is now worth £20.3mln, although as recently as June the shares could have fetched £120mln on the open market.

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