NorthEdge breaks into healthcare market with latest investment

Private equity firm NorthEdge Capital has entered the healthcare market for the first time after supporting a management buyout (MBO) at Direct Healthcare Services (DHS), a manufacturer based in South Wales.

The deal was led by DHS’ chief executive officer, Graham Ewart, Asia Pacific sales director Dermot Patterson, operations director Gerry Boyle and European sales director Stuart McAllister.

Jon Lewis will remain at DHS in the role of R&D director.

Under the MBO team’s direction the firm’s sales have risen to £10.6m, an increase of more than 50%, in the last two years.

Manchester-based NorthEdge has now acquired a majority stake in the firm. Partner and head of new business Ray Stenton, director Jon Pickering and investment manager George Potts led the NorthEdge investment team.

As part of the deal, NorthEdge chairman Michael Joseph will join the DHS board, while George Potts will join in the role of observer.

The CEO of DHS, Graham Ewart, said: “The partnership with NorthEdge is a significant milestone for DHS. We are fortunate to be working with a team who not only share our vision for business growth, but fully support our unremitting dedication to delivering the best customer value.

“This funding allows us to accelerate our growth aspirations and continue to invest in what matters most to our customers – delivering genuine innovation.”

He added: “With a top class management team now in place and the support of NorthEdge we are truly excited about what we can achieve together.”

Established in 2009, today DHS employs more than 80 people and exports its cushions, mattresses and overlays to healthcare providers in more than 20 countries.

Last year, the firm expanded its manufacturing centre to 45,000 sq ft, an increase of 40%, and invested in new machinery.

NorthEdge Capital director Jon Pickering commented: “It has been a pleasure working with the team at DHS and we are delighted to conclude this investment.

“The team has a robust plan in place and I am confident that with our M&A expertise and ability to offer follow-on funding, their market-leading platform will continue to develop even further.”

Venture capital firm BBCH Capital introduced NorthEdge to the deal, while a team from Clearwater International provided corporate finance advice. Law firm Addleshaw Goddard, meanwhile, provided legal advice.