Bain Capital acquires 3i Group and LDC's stakes in MKM Building Supplies

3i Group plc and LDC have agreed to sell their stakes in MKM Building Supplies, the Hull-based builders’ merchants, to Bain Capital Private Equity.

MKM’s management team will retain a significant shareholding in the business.

3i Group’s 2006 investment into MKM, which was partially syndicated to LDC, has supported founder David Kilburn with the firm’s growth plans.

Since this investment, revenues and profits have more than trebled at the UK’s largest independent builders’ merchant. During this time, the business has expanded to 47 branches across the country.

MKM generated revenues in excess of £284m in 2016 and employs over 1,100 people.

David Kilburn, founder and executive chairman of MKM, said: “MKM has enjoyed exceptional growth over the past twenty-one years and I would like to thank 3i and LDC for their long-term backing and support.

“We are looking forward to working with Bain Capital for the next stage in MKM’s development. The UK builders’ merchant market is anticipated to grow to £13bn by 2020 and we expect to expand our UK branch network significantly.”

Matthias Boyer Chammard of Bain Capital Private Equity, added: “We were attracted to MKM’s best-in-class customer service, underpinned by its unique business model, which has enabled the firm to significantly outperform the market.

“Bain Capital has a strong track record of applying its expertise in the building materials and construction sectors to successfully grow companies, including Ibstock in the UK.

“We are delighted to have the opportunity to partner with the MKM management team to further expand the business throughout the UK.”

Jonathan Crane, director of 3i Private Equity, also commented: “David’s leadership and MKM’s unique business model have driven impressive financial performance and a long-term track record of growth.

“We are proud to have supported David and the company during this period of transformation and wish them all the best with their exciting future expansion plans.”

Proceeds to 3i from today’s transaction will be around £70m, and including £11m received by 3i since 2006, represent a 5.9x money multiple.

The transaction is subject to customary regulatory approvals. Subject to these approvals, the transaction is expected to complete by May 2017.

Rothschild acted as lead adviser to the selling shareholders alongside Addleshaw Goddard, as legal adviser, and PwC and OC&C who provided vendor due diligence assistance. Moelis & Company and PwC advised Bain Capital, with Ropes & Gray as legal adviser.