Flipping private equity
Flipping private equity
And consolidation wave laps up coastal accountancy firm
Hello Rainmakers,
A few private equity sales were signed off this week, as well as further activity in the professional services consolidator market.
Rainmakers subscribers have had a couple of summer treats this week too.
We looked at university spin outs and the fall out from the collapse of BHS, which rumbles on.
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Liquidators secure £110m ruling against disgraced BHS directors
Two disgraced former directors of BHS have been ordered to pay £110m to the liquidators of the retail chain, more than eight years after the retail giant collapsed.
It is the latest legal setback for Dominic Chappell and Lennart Henningson, who were ordered to pay £50m and £10m respectively in June for wrongful trading and misfeasance claims after being sued by the liquidators, FRP.
Chappell was sentenced to six years in prison for tax evasion in 2020, was briefly released last year, then returned to prison after breaching his licence conditions.
The collapse of BHS was one of Britain’s largest corporate scandals of recent times. Chappell had bought the historic retail chain for £1 from Sir Philip Green in 2015 through his company Retail Acquisitions.
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FLIPPING PRIVATE EQUITY, PART 1
Regional private equity firm NorthEdge has completed the sale of Cutwel, a UK engineering cutting tool supplier, to Inflexion Private Equity Partners following a period of growth.
Cutwel, which is based in Cleckheaton, serves over 13,000 customers across a range of sectors, supplying them with cutting and machine tool accessories for next day delivery.
The exit was led by Andy Ball, partner, and John Hammond, director, alongside the Cutwel management team.
The deal provides a strong return for NorthEdge Fund II, delivering more than a threefold gross return, and represents the ninth divestment from the fund.
Since the initial investment in May 2018, NorthEdge has supported Cutwel to refine and accelerate its disruptive commercial model, alongside building a scalable platform fit for future growth through investment in people, technology and operational infrastructure.
UNIVERSITY SPIN OUTS IN PERSPECTIVE
In every era of supposed economic renewal, someone will pop and say that the great success story of British history - the university, can be an economic engine for spin outs and ideas to change the world.
Initiatives and reports are commissioned, funds are launched, like Northern Gritstone (team pictured below).
There are successes, but such is the nature of academic research, not all great scientific ideas necessarily lend themselves to robust and profitable investment opportunities.
The report cites Beaufort research that calculates investment into university spin-outs as having increased from £1.11 billion in the academic year 2015/16, to £5.29 billion in 2021/22, which they say reflects “a maturing UK equity investment ecosystem and funding environment” over the past decade.
In context, in 2022 private capital firms in the UK raised a record £70.2bn, which brings the stock of available capital managed from the UK to £145bn.
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FLIPPING PRIVATE EQUITY, PART 2
Sustainability and utilities specialist, Sustainable Energy First, has acquired business utility and sustainability consultancy, Inenco Group from investor ICG. They aren’t saying how much but Inenco made £1.8m in EBITDA on turnover of £18m, the previous year and had a healthy cash pile of £11.8m.
Beech Tree Private Equity-backed Sustainable Energy First said the deal marks an exciting time for both companies, creating a scaleable energy and sustainability services provider that will continue to support sustainability services.
Lytham St Annes-based Sustainability Energy First and Lytham-based Inenco say the combined new business will remain centred around its people and technology, creating a work environment that engenders high levels of engagement to deliver quality customer service.
CONSOLIDATOR LANDS CATCH AT FLEETWOOD
Xeinadin, one of the wave of accountancy and professional services consolidators, has acquired Jones Harris Limited and sister company, The North West Business Support Centre (NWBSC).
Following South Wales-based Clay Shaw Thomas in July, it marks the 25th firm to join Xeinadin in the last two years.
Established over fifty years ago, Jones Harris is based in Fleetwood and predominantly works with local businesses specialising in audit and tax work.
Sister company NWBSC provides professional payroll services across the North West of England.
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CMA PROBE OVER VENTILATION DEAL
The Competition and Markets Authority (CMA) has launched a phase 2 inquiry into Lindab International AB’s acquisition of HAS-Vent Holdings after initial concerns about competition.
It’s looking into how the deal will impact the supply of circular ducts and fittings in England and Wales.
The inquiry found that the acquisition could significantly reduce competition in the supply of circular ducts and fittings, particularly in the Nottingham and Stoke-on-Trent areas.
In these regions, the companies are major competitors with limited alternatives, potentially leading to fewer choices and higher prices for the construction sector, especially for specialist ventilation system installers.
Kirstin Baker, chair of the independent inquiry group, said: “We’re concerned this would remove one of two main suppliers of circular ventilation ducts and fittings in the Nottingham and Stoke areas, risking installers of these systems paying over the odds and then having to pass these costs onto their own customers.
“Our findings are provisional, and we now welcome responses on our preliminary conclusions and the potential remedies in this case.”
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RAINMAKERS SEMINAR IN BIRMINGHAM
As the corporate finance community anticipates the end of a subdued and uncertain period, the upcoming Rainmakers Seminar in Birmingham in September will explore the challenge of becoming deal-ready for 2025.
With a more stable policy landscape expected following the general election and some economic headwinds easing, the seminar will concentrate on several key areas:
Current market demand and appetite
Funders’ primary areas of focus
The increasing significance of factors beyond financials, especially ESG and data
Opportunities within the Midlands market and Rainmakers’ role in driving growth
Hear from Katie Trout, director of policy & partnerships at the West Midlands Growth Company on what opportunities are available for the corporate finance community to engage with across the region.
A keynote speech from a leading West Midlands business figure will follow, offering their insights into working with Rainmakers on M&A proposals and securing investment.
An expert panel consisting of Tom Hustler, senior investment director at Palatine, Nick Gillott, corporate finance partner at Grant Thornton, Deepak Parekh, senior director at Shawbrook Bank, with more speakers to be announced.
RAINMAKERS CONFERENCE IS BACK IN 2025
The art of such deals is just the sort of thing which will pepper our 2025 Rainmakers Conference.
It’s being supported by BGF, Dow Schofield Watts, NorthEdge, Palatine, Shawbrook, Squire Patton Boggs, while PHD Industrial Holdings is a breakout room partner.
So save the date for Rainmakers 2025 – Wednesday 26 March, 2025 – and secure your place today at The Point, Emirates Old Trafford, Manchester.
It will bring more opportunities to network, more amazing speakers, more candid debate, more inspiring entrepreneurs, but also a chance to discuss the challenges of value creation.
The first Rainmakers Conference this March sold out, with more than 400 people attending to hear the insights and perspectives from entrepreneurs, investors and advisors, and to network with senior figures from across the corporate finance community.
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