Ecommerce Firm Thrasio’s Collapse Leads to Private Equity Fight

The collapse of eCommerce startup Thrasio has reportedly triggered a fight between its former private equity backers.

Oaktree Capital Management has written a letter to private equity (PE) firms Silver Lake and Advent criticizing them for their oversight of Thrasio, the Financial Times (FT) reported Sunday (Sept. 8). All three firms had backed Thrasio, which declared bankruptcy earlier this year.

The letter, written to investors and seen by the Financial Times, says Oaktree’s trust in Silver Lake and Advent was “misplaced.”

“We believed that Advent and Silver Lake, experienced PE firms with whom we have partnered numerous times, would be steady hands at the helm and able to professionalize the business,” the trio wrote, adding that “this proved to be incorrect.”

“We didn’t have appropriate controls in place and instead relied on our alignment with the sponsors,” they continued. “This was clearly an error: we expected more judicious and cautious deployment of capital for growth, but our trust was misplaced.”

PYMNTS has contacted Silver Lake for comment but has not yet gotten a reply. Representatives from Oaktree and Advent declined to comment.

The FT notes that prominent investment managers’ criticisms of each other rarely become public or appear in writing, as PE firms often invest together across a variety of projects and need to cultivate cordial relationships.

Thrasio, a third-party aggregator of Amazon products, had once been valued at $6 billion. But last year, reports emerged that the company was dealing with financial difficulties following a drop in online spending in the wake of the COVID-19 pandemic, and was considering restructuring options.

According to the FT, Thrasio emerged from bankruptcy in June, with new CEO Stephanie Fox saying it had a “clean balance sheet, fresh capital and a renewed focus on our core business of building brands.”

However, a report from S&P Global Ratings issued a week later said the company’s capital structure was “unsustainable” and warned of a “possible default scenario in the next 12 months due to its tight liquidity and covenant headroom.”

As PYMNTS wrote in February, the company’s bankruptcy followed a troubled period for the aggregator sector, with Benitago Group filing for bankruptcy in 2023, and Apollo seeking a buyer for its aggregator Perch.

“As funding dries up, and as macro pressures confront the aggregators, the debt and obligations have become more onerous than the companies can bear,” PYMNTS wrote. “And the operating costs are considerable, given the fact that the aggregators had helped with everything from renegotiating vendor contracts to improving supply chains to helping the acquired firms become direct-to-consumer enterprises.”