North West buyouts exceed £780 million

According to the latest figuresfrom the Centre for Management Buyout Research (CMBOR), the North West’s private equity buyout market has remained resilient in the first six months of 2014.

The research, sponsored by Equistone Partners Europe and EY, shows that the region continues to be one of the UK’s strongest in terms of deal volume, seeing 15 transactions across the North West with a total value of £783.1 million.

Activity during the first quarter of the year was particularly strong with big-ticket transactions including the sale of Skelmersdale-based footwear chain Hotter Shoes by Gresham Private Equity to Electra, valuing the company at around £150m.

In addition, Carlisle-based Stobart Group sold half of its trucking business to a group led by William Stobart for £280million.

In the second quarter of 2014, Hg Capital sold Americana International (the Manchester fashion group behind Bench and Hooch brands) to Emeram Capital Partners. Also, KCP achieved a 3.8x return on investment after selling bespoke furniture manufacturer Neville Johnson to Alcuin Capital Partners for around £22 million.

London still remains the strongest performing region seeing 20 deals (worth £2.88 billion) in the first half of 2014.

During the corresponding periodlast year (H1 2014) the value of deals in the North West was considerably higher at £1.33 billion across 18 transactions.

However, this figure should be taken lightly because last year saw the sale of Speke-based retailer B&M Bargains to US private equity firm Clayton, Dubilier & Rice for £965 million and there has also been a spike in recent IPO’s such as Boohoo, AO.com and B&M

Steve O’Hare, partner at Equistone in the North of England, said: “Once again, the latest figures demonstrate the consistency of the North West’s buyout market. While the first half of 2014 was not as active as last year, firms are looking at the next six months with a renewed sense of optimism.

“The consensus is that pipelines are extremely healthy and we expect activity to pick up considerably over the next two quarters.

“It is also encouraging to see that funding from the debt market remains accessible in a number of forms to businesses in the lower end of the middle-market, as well as for larger transactions.

“This is evident in the number of refinancings that have successfully gone ahead in the first six months of 2014.”

Tim Morris, corporate finance partner at EY in the North West, said: “A consistent flow of high quality businesses coming to market remains vital if the region is to go some way to matching last year’s performance.

“Our own pipeline, alongside good debt market conditions and the strong pool of North West-based corporates entering new phases of investment, suggests that the region’s buyout market can have a good year.

“Three of the top four largest exits in the UK in Q2 2014 – B&M Retail, Card Factory and Polypipe – were all Northern businesses that listed on the public markets.

“While this highlights the strength of opportunity for private equity investors backingcompanies in the North, it also illustrates that the attractive IPO market is likely to continue to diminish the pool of Northern secondary buyout opportunities, which have traditionally helped to replenish the regional deals markets.”