Exclusive

PORTFOLIO UPDATE - Our Midlands team backs a 25 strong portfolio of forward-thinking businesses across a range of sectors - see how they are growing

The diversity of the Midlands business landscape makes it an attractive prospect for investors. 

An impressive mix of ambitious smaller firms and competitive mid-sized businesses are investing in the latest technology, recruiting highly skilled talent and introducing new services. 

Our Midlands team backs a 25 strong portfolio of forward-thinking businesses across a range of sectors, and here we look at some of the ways we are helping to support their long-term growth.

DISTRIBUTION

The logistics industry is booming, and it is in no small part down to the incredible acceleration of the UK’s e-commerce industry, which is the fastest growing retail market in Europe.

Britons spent an estimated £80billion shopping online in the year to the end of August 2016, largely thanks to the advances in digital and mobile technology enabling time-poor consumers to embrace the convenience that online shopping provides.

Consumer spending power has created an unprecedented same-day and next-day delivery culture that is also emerging across industry, from healthcare and automotive to freight distribution, and forward thinking logistics firms are quickly capitalising on the evolving market.

We have made two significant investments in the sector in 2016. Earlier this year, we backed the £175million secondary buyout of CitySprint, the UK’s leading technology-driven same day distribution company.

The investment cements CitySprint’s first mover advantage in the £1.7billion same day market, where it is the UK market leader, and enables the company to fast-track the development of its innovative final mile delivery offering through its newly-created accelerator division, LastMileLink Technologies.

Since the transaction, the business has already completed five acquisitions – including The Courier Co-operative in Birmingham and ASAP International and Peps Couriers, both located in London.

In April we backed the £17million management buyout of Panther Logistics, the UK’s largest independent two-man next day home delivery provider.

Panther specialises in two-man and one-man assisted delivery services for major brands and retailers, and provides customers with next day deliveries and UK-wide coverage via a network of eight regional hubs. 

Following the investment, Panther plans to continue to invest in its operations and develop new service innovations to support its customers. 

We also supported a re-financing of The Pallet Network (TPN) alongside the current management team. LDC originally invested in TPN, one of the UK’s leading palletised freight distribution networks, in 2007, and has since supported an acquisition and the opening of a purpose built operational hub, which helped more than double turnover to £72million.


TECHNOLOGY

The turnover of digital technology businesses in the UK is growing 32% faster than the national average, and the sector now accounts for 1.56million jobs across the nation. It’s therefore no surprise that businesses wanting to build a competitive edge are investing in new technology platforms.

We recognise the escalating opportunities for growth in this sector. To date, LDC has invested over £850million into more than100 technology, media and telecommunication (TMT) firms, and our current TMT sector portfolio collectively employs over 3,800 people across the UK.

In 2015, we took a significant minority stake to support the development of IT services and software provider Centiq Group. The business specialises in the design, configuration and implementation of SAP HANA, a rapidly growing in-memory platform. With a highly experienced team at the helm, we continue to offer strategic support to help enhance the business’ core offering. 

Portfolio company ATCORE, a provider of reservation and e-commerce solutions for travel companies, has acquired Tiger Bay. Tiger Bay provides dynamic and flexible tour operating platforms that deliver end-to-end systems or integration into existing websites. 

The acquisition strengthens the ATCORE travel suite, increasing the breadth of its products and services whilst enabling expansion into specialist market sectors.

This is just one step the business has taken to achieve greater scale and success since LDC backed the £45million management buyout of the business in November 2014.

LDC recently exited Node4, the regional data centre and managed IT and communications specialist, but not before a period of impressive growth. Indeed, Node4’s management team were recognised by the British Private Equity & Venture Capital Association (BVCA) as the top Mid-Market Team at the 2016 Midlands Management Team Awards.

In addition to our current thriving TMT portfolio businesses, companies in other sectors are embarking on the journey of digitalisation as the benefits of this are increasingly clear. Under our stewardship, same-day distribution company CitySprint will now accelerate the on-going roll out of its ‘Onthe-dot’ retail and consumer brand, which is a delivery service that allows shoppers to choose a one hour delivery window.


CONSUMER

Household spending in the UK increased to £291.1billion in Q2 2016, the highest volume spending since the start of the series research.

LDC is committed to backing a range of diverse small and medium-sized businesses in the consumer space to help them gain a larger share of this market.

LDC originally invested £22million in premium lifestyle brand Joules in November 2013 to support the company’s expansion. Between FY2013 and FY2015, Joules increased revenue 50% to £116.4million, driven primarily by its store roll-out (from 61 to 98), increased sales within its wholesale accounts and expansion of its e-commerce business. In the same period,international revenues grew circa 200% to £10.6million, underpinned by significant investments in the group’s infrastructure, including supply chain, IT, international sales support offices and people. 

Joules’ £140million IPO on AIM earlier this year saw LDC generate gross proceeds of £53million on its investment, representing a money multiple of 2.4x. Following the IPO, LDC has reinvested for a 7% holding. 

In September 2015, we backed the management buyout of Aqualisa, a premium shower brand, through a significant equity investment. The business designs and manufactures a range of market-leading digital, mixer and electric showers and accessories, and launched the first digital shower in 2001.

Its commitment to technology and research & development has propelled Aqualisa to the forefront of its market, and recent accolades include the Queens Award for Enterprise and Corgi Product of the Year awards. We continue to work closely with the management team to unlock the huge potential of the brand through continued development to achieve even greater scale in the years ahead. LDC also backs the 2016 BVCA ‘Social Responsibility Team of the Year’ winner Forest Holidays, a specialist rural accommodation provider, and Away Resorts, a leading operator of British holiday parks. Both businesses are developing new sites, to keep up with UK customer demand for ‘staycations’.


INDUSTRIALS

Traditional industries like manufacturing, aerospace and rail are the heartbeat of the Midlands, with a reputation for innovation and resilience that drives substantial economic growth. 

We have a proud history of backing some of the most promising and forward-thinking businesses in these sectors, including two leading aviation firms.

As an LDC portfolio company, premium aircraft interiors manufacturer AIM Aviation grew its turnover by 67% and more than doubled its order book. We exited the business in 2016, delivering a 3.5x money return for LDC.

MB Aerospace provides engineering services for aero-engines and industrial gas turbines. Under LDC’s stewardship, the business grew its turnover from $28million to $81million, following a growth strategy that ultimately delivered a 2.8x money multiple.

Outside of aerospace, there is significant Government investment into rail infrastructure projects across the UK. These include major electrification schemes such as Great Western, Thameslink, HS2 and Crossrail, which is Europe’s biggest construction project.

Aspin Group is a business that is well positioned to capitalise on Network Rail’s investment in electrification.

The company, which joined our portfolio in 2015, specialises in the design and construction of piled foundations for the rail sector. With our backing, the business’ impressive management team continues to target organic and acquisitive growth to complement is pan-regional network.

Earlier this year, we backed the management buyout of TXM Plant, the UK’s largest supplier of specialist operated plant to the rail sector. Following the transaction, TXM Plant intends to accelerate its growth by investing heavily in its fleet and expanding its range of value-added services.

 Additional LDC Midlands portfolio companies continuing to grow include: Kee Safety, a global provider of safety solutions for contractors and the building industry, A-Gas International, the leading independent distributor of speciality gases and chemicals and Eley, manufacturer of high quality sporting ammunition. 

The region enjoys a rich heritage and a desire for innovation. Our focus is to build on that tradition and support more ambitious management teams. Together we’ll add value and build industry leading businesses that deliver impressive growth.