Partner Article

LDC partially exits Bolton social housing specialist Forrest

Private equity firm LDC has partially exited its investment in North West social housing regeneration specialist Forrest, following a secondary buyout backed by Palatine Private Equity.

The transaction provides Palatine and LDC with a combined majority stake in the business and represents a 2.4x return on LDC’s original investment.

Bolton-based Forrest is a leading provider of essential refurbishment and responsive maintenance services to the social housing market in the North of England.

Over the last three years Forrest has established a renewables division becoming one of the first registered installers under the Government’s Green Deal and Energy Company Obligation (ECO) initiatives. The business also undertakes new build development and estate renewal services for its core social housing customer base.

The company works with major social housing clients including Bolton at Home, City West Housing Trust, Salix Homes and Blackpool Coastal Homes. While the company predominantly works in the North West it also has clients in Yorkshire, the North East and the South West of England.

The company employs around 500 people and also operates a responsive maintenance division from a site in Leeds. Forrest is led by chief executive Lee McCarren and managing director Mark Lyons. Bob Holt, chairman of social housing company Mears Group plc, will become non-executive chairman. Current chairman Robert Morgan will leave the business.

Since LDC backed the company in 2007, Forrest has seen its turnover grow from £38 million to over £100 million. The business has also since launched a new environmental services division, opened a regional service centre in Bolton and has made a number of senior board appointments with the support of LDC. Forrest now boasts an order book worth £1.2 billion after sales grew by almost 50 per cent in 2012.

Jonathan Bell, director and co-head of LDC in the North West, who will remain on the board at Forrest, said: “We have supported Forrest’s consistent growth in the social housing support services sector and its transition into the leading regeneration specialist in the North of England. We are committed to working with Palatine to continue to support the business as it further develops its environmental services offering and targets new framework opportunities.”

Lee McCarren, CEO, Forrest, said: “LDC, led by Jonathan Bell, have been a hugely supportive partner for the business over the past six years. With Palatine alongside us as an additional investor, we can continue to drive improvements in the quality of our customer service offering, as well as developing more new and complementary service lines.

“This on-going strategy has been the key to our many consecutive years’ growth and to our strong, long-term customer relationships.

“On behalf of the business, I’d like to thank Robert for his invaluable counsel and for the time and energy which he has invested into Forrest since he became our chairman. He has played an influential role in the company’s recent successes.”

In the past 12 months, LDC’s North West team has completed four new transactions and invested almost £80m of equity backing high quality North West based management teams to realise their growth plans, including the global leader in the design and manufacture of high security vehicle barrier systems, ATG Access, and international firefighting equipment business Angus Fire.

The deal represents the second exit for LDC’s Manchester office in the last month; following the exit of Green Sky Energy to E.ON Connecting Energies, which delivered a 4.1x money return. The office has also completed the exit of its investments in childcare provider kidsunlimited and international engineering group MB Aerospace during 2013.

Nationally, LDC has welcomed 17 new businesses into its portfolio in 2013 representing over £300 million of new equity investment. The mid-market investor has also completed seven exits and provided £28 million of follow on funding for buy and build acquisitions for current portfolio businesses since the start of the year.

A team at Deloitte, led by partner Paul Trickett, advised LDC and management, on the deal, while Manchester-based Partner Jodi Birkett provided financial due diligence. David Crout at PMSI Consulting provided commercial due diligence. Dave Foreman, a partner at Praetura Capital provided banking and financial services.

RBS (Tony Dean and James Adams) and Santander (Chris Thomas and Paul Wickers) provided senior debt and working capital facilities of £26 million to support the transaction.

LDC and management received legal support from DWF’s Jonathan Robinson and Darren Ormsby, while Rebecca Grisewood of Gateley advised Palatine. Richard Oman of Addleshaw Goddard advised the banks. Management due diligence was carried out by the Quinn Partnership with Marsh carrying out insurance due diligence.

LDC is part of Lloyds Banking Group and is authorised and regulated by the Financial Conduct Authority. It backs ambitious management teams from UK-based companies seeking between £2m and £100m of equity for management buy-outs, institutional buy-outs or development capital transactions.

This was posted in Bdaily's Members' News section by Simon Malia .