By Julian Bailey BBC Radio Five Live Wake Up To Money

Debenhams is a big name on the High Street

Debenhams is shortly expected to announce it is returning to the stock market after two years under the ownership of venture capitalists.

The sale will be a money-spinner for the private equity backers who bought the department store group in 2003 in a deal worth �1.7bn ($3bn).

Not only have they taken out more than �1bn in dividends but the new Debenhams could be valued at somewhere between �2bn and �3bn.

So CVC, Merrill Lynch Private Equity and Texas Pacific - who invested �600m of their own money - will make a handsome profit.

What have they done to deserve it?

Debt worries

They've geared up the company with debt and not necessarily left much for the new shareholders Mickey Clark, Wake Up To Money Listen to Wake Up To Money

Sales have been rising - but only slowly.

Like-for-like sales growth at Debenhams was 0.6% in the six months to March 2006, which is not bad in a tough retail environment.

But investors will have to ask themselves whether that's enough to warrant a possible �3bn price tag.

The group is also saddled with �1.7bn of debt, although this may reduce during the flotation.

Debenhams has done well at turning out brands of clothing that appeal to aspirational customers, but are pitched at mainstream prices.

Julien Macdonald and Jasper Conran are both involved in the Designers at Debenhams range, and management will be showcasing this to investors over the next few weeks.

New tactic

The Designers at Debenhams range helped push sales

The prospectus will also talk-up Debenhams' expansion plans.

It has signed contracts to open six new department stores by the end of August 2007 and 23 new department stores by the end of 2011.

"They've geared up the company with debt and not necessarily left much for the new shareholders," says Wake Up To Money's Mickey Clark.

"It's a tactic that investors are becoming more aware of. Companies like Britvic have come back to the market and sometimes they don't necessarily perform that well."

Paper profit

The real financial winners from the flotation are likely to be management at Debenhams.

The Sunday Times recently speculated that chief executive Rob Templeman, chairman John Lovering and finance director Chris Woodhouse will make a combined paper profit of �100m on the listing.

If institutions shun the latest Debenhams sale, then it is possible that the company could be sold on to yet another private equity buyer looking to make a gain over a two-to-five year period.