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Investment Review of 2014

If 2013 was the year that the economy stabilised then early 2014 will be remembered for the recovery in confidence in the market. Despite some economic jitters in recent weeks, businesses are beginning to reap the benefits of the more settled and promising trading conditions and management teams have started to reconsider their funding requirements as they look ‘above the parapet’ for growth opportunities.

In 2014 LDC supported the ambitions of 13 new management teams with the backing of over £220m in equity investment. This makes us one of the most active private equity houses in the UK.

International expansion remains at the top of many board room agendas and one of the key drivers for seeking external investment.

Our support for the £50m management buy-out (MBO) of automotive data business Clifford Thames, the buyout of Connect Managed Services and the recent £42m MBO of manufacturer Eley, and the £70m Capital Economics transaction provide excellent examples of firms with the confidence to explore new markets from North America to Africa and the Middle East.

Alongside our commitment to delivering organic growth through product investment, operational improvement or international expansion, bolt-on acquisitions are another way we help our portfolio businesses build scale.

CEL Procurement, which we invested in towards the start of the year, will use our support to target new markets, outside the UK, but also identify complementary acquisitions. So far in 2014, we have provided £28m to support follow-on acquisitions for our portfolio.

The strategy will help to accelerate the expansion of other businesses that we have recently welcomed to the portfolio, including Prism Medical, which we acquired for £30m in April. Our support for the buyout of leading cake and dessert manufacturer Ministry of Cake from Greencore PLC and the £45m MBO of Anite Travel will also consider acquisitions among other strategies.

Our investment directors, who join the boards of portfolio businesses, will also work closely with management teams to help support the development of their proposition, including investment in R&D and technological development.

LDC’s investment in oil and environmental services firm Adler and Allan in September will deliver funds for acquisitions, but also in product development. With corporates coming under intense domestic and international competition it is essential that our businesses are operating at the cutting-edge of their respective markets.

This is something that the team at Stroma, whose management buy-out we backed in May, fully appreciate. The company is developing software that will help to capitalise on an ever tightening regulatory market in the fast-moving energy and operational efficiency markets.

While strategies will change in response to market conditions, LDC remains committed to providing the financial support and expertise that will unlock the true potential of a company. We look forward to backing more of the UK’s most ambitious businesses and supporting them through their own growth journey.

To find out more about LDC’s criteria for investments. Please click here.

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