The transaction report 2012 Quarter 2

The Overview

21 New Row, Covent Garden, London, WC2N 4LE. T: 0203 327 4029 E: [email protected] MARBLE HILL PARTNERS www.marblehillpartners.com Interim Management & Executive Search The private equity transaction report 2012 Quarter 2

Contents Introduction

Introduction 2 Welcome to Marble Hill Partners’ second Transaction Report of 2012 which offers a snapshot of UK Private Equity activity and Q2 Transactions 2012 3 accompanying analysis for Q2 this year. In this summary you will find an alphabetical index of all private equity transactions Observations 8 recorded in the UK and a brief breakdown of the sectors and types of transactions completed.

Transaction Volume 9 Marble Hill Partners (MHP) is a multi disciplinary Interim Management and Executive Search firm which specialises in working with Private Equity backed businesses.

Transaction Focus 13 MHP most commonly work with investors and management teams in the first 18 months post MBO filling the gaps in the management team through our executive search services and introducing Appointments 15 Interim executives to deliver professionalisation and process improvement programs. Strategic change and turnarounds are also common triggers for our services.

For the purpose of our market research and business development we have been collating data on the UK Private Equity market for the last four years. In January 2011 we published our first Transaction Report which has evolved this year to become The Overview , it will be released quarterly with a more in depth analysis at the end of each year. If you wish to see last year’s reports, please get in touch.

The Overview T: 0203 327 4029 www.marblehillpartners.com 2 The private equity transaction report 2012 Quarter 2

Q2 Transactions 2012

The data has been collated from the Trade Press and Investor Press Releases and whilst we cannot guarantee that our research is 100% accurate (not all transactions are publicised and in many cases values are not disclosed) we are keen to share our research and observations with our industry. We have only made note of transaction sizes of £5million and above.

Company Transaction type Exiting investor New investor Date Transaction size Industry

Game Group Distressed Purchase OpCapita 01 April 2012 Undisclosed Retail Vodat International MBO Maven 02 April 2012 £5,000,000 IT/Telco Services Data Explorers Exit- Trade Sale Bowmark Markit 03 April 2012 Undisclosed Analytics Specialist Volumatic MBO NVM 03 April 2012 £6,000,000 Cash Handling for retailers LM Funerals SBO Sovereign Duke Street, Babson 10 April 2012 £37,500,000 Funerals Capital Capital Europe, Metric Capital Partners Loungers Piper Private Equity 10 April 2012 £16,000,000 Leisure Cranswick Exit- Trade Sale LDC Westland Horticulture 12 April 2012 £18,000,000 Retail Pet Product Jede UK MBO Broadlake Capital 12 April 2012 Undisclosed Retail Deloro Stellite Exit- Trade Sale Duke Street Kennametal Inc 13 April 2012 Undisclosed Metal Products Adelie Foods Exit- Trade Sale Duke Street India Hospitality Corp 16 April 2012 £350,000,000 Food Jaeger Group MBO Better Capital 16 April 2012 £19,500,000 Retail Seven Technologies MBO YFM 18 April 2012 £6,600,000 Electronics The College of Law MBO Montagu 19 April 2012 £200,000,000 College Bathrooms.com Growth Capital Augmentum Capital 23 April 2012 £7,500,000 Retail & Dawn Capital

The Overview T: 0203 327 4029 www.marblehillpartners.com 3 The private equity transaction report 2012 Quarter 2

Q2 Transactions 2012 continued

Company Transaction type Exiting investor New investor Date Transaction size Industry

Solar Care Exit- Trade Sale Barclays Ventures Voyage Care 24 April 2012 Undisclosed Specialist & RBS Healthcare Olaer Group Exit- Trade Sale Gresham Parker Hannifin 24 April 2012 Undisclosed Manufacturing P2i Growth Capital Naxos Capital Partners 25 April 2012 £12,000,000 Chemicals Raleigh Exit- Trade Sale Perseus Capital Accell Group 26 April 2012 £61,800,000 Bicycles/Retail Rex Restaurants MBO Graphite Capital 26 April 2012 £21,000,000 Leisure Bifold Group SBO Caird Capital LDC 27 April 2012 £70,000,000 Oil&Gas Valves Four Seasons MBO Terra Firma 30 April 2012 £825,000,000 Care Homes Healthcare Just Eat Growth Capital Vitruvian Partners 30 April 2012 £40,000,000 Internet Purity Soft Drinks MBI Langholm Capital 01 May 2012 Undisclosed FMCG Cap MBO Montagu 02 May 2012 Undisclosed Publishing Weetabix Exit- Trade Sale Lion Capital Bright Food 03 May 2012 £1,200,000,000 FMCG M & C Energy Exit- Trade Sale Lyceum Schneider Electric 04 May 2012 Undisclosed Utilities Wear Inns MBO NVM & Business 08 May 2012 £10,000,000 Leisure Growth Fund Shoon Distressed Purchase GA Europe 09 May 2012 Undisclosed Retail Cream Holdings Exit- Trade Sale Ingenious Media Live Nation 10 May 2012 £13,930,000 Events Active Capital Entertainment Cinesite MBO Endless 11 May 2012 Undisclosed Media inov-8 MBO Isis 14 May 2012 £20,000,000 Shoes

The Overview T: 0203 327 4029 www.marblehillpartners.com 4 The private equity transaction report 2012 Quarter 2

Q2 Transactions 2012 continued

Company Transaction type Exiting investor New investor Date Transaction size Industry

Bathstore MBO Endless 14 May 2012 £15,000,000 Retailer Leisure Pass Group MBO Primary Capital 14 May 2012 £35,000,000 Leisure SGX Sensortech MBO Baird Capital 16 May 2012 £15,000,000 Electronics Limited Cambrian Pet Food Growth Capital Swander Pace 16 May 2012 Undisclosed Speciality Retailer/FMCG Ocean Outdoor SBO Smedvig Capital LDC 17 May 2012 £35,000,000 Advertising Assisted Growth Capital CBPE 18 May 2012 Undisclosed Hospitals Reproduction & Gynaecology Centre BigHand SBO LDC Bridgepoint 21 May 2012 £49,000,000 Software Integrated MBO Gresham 22 May 2012 £23,000,000 Software Services Engineering Stores Associates Notonthe Growth Capital Fidelity Partners, 22 May 2012 £10,000,000 Online Shopping highstreet.com Greylock Partners, Website Index Ventures WFEL Exit- Trade Sale Dunedin KMW 23 May 2012 Undisclosed Defense Aspirations Care BIMBO August Equity 28 May 2012 Undisclosed Mental Health Group & Learning Difficulties CloserStill SBO NVM Phoenix Equity Partners 29 May 2012 £13,000,000 Events The Hoxton Hotel SBO Bridges Ventures Ennismore Capital 30 May 2012 £70,000,000 Leisure

The Overview T: 0203 327 4029 www.marblehillpartners.com 5 The private equity transaction report 2012 Quarter 2

Q2 Transactions 2012 continued

Company Transaction type Exiting investor New investor Date Transaction size Industry

Iglu.com SBO Matrix Growth Capital Partners 31 May 2012 £19,000,000 Leisure Capula Exit- Trade Sale Dunedin Imtech 01 June 2012 Undisclosed Technology Windsor Exit- Trade Sale Hutton Collins Hyperion 01 June 2012 Undisclosed Insurance Group Symingtons SBO Bridgepoint Intermediate 06 June 2012 £125,000,000 FMCG Capital Group Marston Group SBO Gresham Inflexion 07 June 2012 Undisclosed Judicial Services Transys Projects Exit- Trade Sale Maven Vossloh Kiepe 07 June 2012 Undisclosed Transport/ Distribution Industrial Acoustics SBO MML Partners AEA Investors 07 June 2012 Undisclosed Noise Control Products Lifeways SBO August OMERS 11 June 2012 Undisclosed Supported Living Community Care Private Equity Private Equity Molinare Distressed Purchase Next Wave Partners 12 June 2012 Undisclosed Media Openet Growth Capital Balderton Capital, 13 June 2012 £13,500,000 Software Cross Atlantic and Kreos Capital Vertu MBO EQT 14 June 2012 £243,000,000 Electronics Technical Software MBO Encore Capital & 14 June 2012 Undisclosed Software Consultants Octopus Ventures Metronet SBO YFM & Acceleris LDC 14 June 2012 £11,000,000 Technology Services FoundOcean Growth Capital Ambienta 15 June 2012 Undisclosed Services Alliance Boots Partial Exit KKR Walgreen 19 June 2012 £4,000,000,000 Retail/FMCG

The Overview T: 0203 327 4029 www.marblehillpartners.com 6 The private equity transaction report 2012 Quarter 2

Q2 Transactions 2012 continued

Company Transaction type Exiting investor New investor Date Transaction size Industry

WE7 Exit- Trade Sale Eden Ventures Tesco 21 June 2012 £10,800,000 Media Knights Solicitors MBO Hamilton Bradshaw 25 June 2012 Undisclosed Legal CTC Aviation MBO Inflexion 25 June 2012 Undisclosed Training Care Fertility Group MBO Bowmark 27 June 2012 £60,000,000 Fertility Clinics Entoria SBO Isis BlueGem 28 June 2012 Undisclosed Wine Distribution Capital Partners Horizon Care MBO NBGI 29 June 2012 Undisclosed Child Care Excelsior MBO GCP 29 June 2012 Undisclosed Packaging Technologies Hesley North MBO Bowmark 29 June 2012 £75,000,000 Disability Care

*It would it be of huge benefit to the provenance of The Overview transaction report if we were privy to deal information and press releases directly from investors. Please forward our report on to your media relations teams so we can be included in press release distribution lists when transactions are announced.

The Overview T: 0203 327 4029 www.marblehillpartners.com 7 The private equity transaction report 2012 Quarter 2

Observations: Sam Smith – Managing Director

Our statistics show UK Private When these conditions will emerge is anybody’s guess and until then Equity bearing up well in UK Private Equity houses will continue to be frustrated by a scarcity of good quality assets and inflated valuations for those coming to market. what can only be described as a challenging market. Currently the sector is divided into three distinct categories of Private Equity House. Those who have raised funds in the last 2-3 years and Transaction volumes have have cash to deploy, those who are in the process of raising their next remained fairly static and fund (with varying degrees of success) and those who have failed cash deployed is actually and are investing on a deal by deal basis (perhaps the beginning of the end?). down. While the macro economic uncertainties make forecasting almost For many in fundraising mode, 2012 will be “a do or die year”. Notable impossible there remains a huge amount of dry successes so far have been Isis Equity Partners raising their fifth fund of £360 million and at the other end of scale BC Partners raising €6.5 powder left in the UK PE market. We believe billion. However with less money to invest institutions are looking for therefore that a stable eurozone coupled with clear differentiations between houses, strong track records of delivering signs of green shoots of economic growth in exits and stable teams with clear succession planning built in. the UK economy will lead to a dramatic uplift With the UK mid market currently overstocked (80 houses at our last in buy-out activity. count) a shake-up is definitely overdue. It will be interesting to see who will be the winners and losers over the coming years.

The Overview T: 0203 327 4029 www.marblehillpartners.com 8 The private equity transaction report 2012 Quarter 2

Transaction Volume: Arden Tomison – Director

Q2 2012 has seen 51 new Transaction volumes 2009 - 2012 investments, of over £5m, 80 New Invest completed by PE houses in Exit (Trade or IPO) the UK. This figure is slightly 70

down on Q1’s 58 but broadly 60 in line with the trend we’ve 50 witnessed over the last three years; where new investment activity has 40 peaked in Q1. It is also up on this time last year 30 and with exit activity at its highest level 20 recorded by MHP there are positive indicators that the market is moving. 10

0 Despite transaction volumes rising since 2009, capital deployed Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 has been falling and average transaction sizes are significantly down 2009 2010 2011 2012 over the period. In order to fully deploy their funds, investors will have to generate a greater volume of transactions or look to do much larger deals.

The Overview T: 0203 327 4029 www.marblehillpartners.com 9 The private equity transaction report 2012 Quarter 2

The spike in 2010 does include the £2.9bn investment in Tomkins. Average transaction values Even when excluding this transaction mean investment was still considerably higher in 2010. A continuation of this downward trend £300m Mean into 2013 will further increase competition in the mid-market. Median

£250m Capital deployed £200m Year Capital Disclosed Mean Median transactions* 2010 £15.2bn 102 £149m £41m £150m 2011 £10.2bn 104 £98m £27m £100m 2012/half £5bn 62 £80m £24m

£50m *Not all transactions are disclosed and for these workings only disclosed transactions were used.

£0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2010 2011 2012

The Overview T: 0203 327 4029 www.marblehillpartners.com 10 The private equity transaction report 2012 Quarter 2

Investment by sector

Surprisingly the consumer sector is coming out on top again for the most investments by sector. Interesting transactions this quarter include Rex Restaurants (owner of the west end favorite, The Wolseley) acquired by Graphite Capital and Leisure Pass Group, the sightseeing specialist, bought by Primary Capital.

However the numbers are certainly skewed by distressed retail transactions including Game, Jaeger Group and Bathstore; of the 36 consumer investments so far this year 7 have been distressed investments.

36 Consumer 8 Healthcare 19 Business Services 3 Education 16 TMT 2 Engineering / Construction 15 Manufacturing 1 Other 9 Financial Services

The Overview T: 0203 327 4029 www.marblehillpartners.com 11 The private equity transaction report 2012 Quarter 2

Investment by house

In total the first half of 2012 has seen 76 investment houses investing in Most active houses 109 businesses and exiting 25 via trade sale. It’s important to note that LDC 7 of the 109 new investments 22 have been Secondary Buy-outs meaning there have been 47 exits in total. Business Growth Fund (over 5m) 4 Bowmark 3 Despite the investment landscape remaining tough it has been possible for individual houses to complete multiple transactions with Endless 3 LDC once again the most active investor having completed 7 new Inflexion 3 investments so far in 2012.

Where there is a compelling investment opportunity competition amongst houses has been robust which has allowed vendors the ability to drive the agenda.

The Overview T: 0203 327 4029 www.marblehillpartners.com 12 The private equity transaction report 2012 Quarter 2

Transaction Focus: James Harley Booth - Director

Continuing in the consumer space; Lion Capital has sold a 60% stake in Mega Market Weetabix to China’s Bright Foods for £1.2bn valuing the company at £2bn. This represents a great return for Lion who paid £642m for the In June it was announced business in 2004 and will retain a 40% stake. that US retailer Walgreen is to pay KKR £4.3bn for a 45% One other notable transaction for a number of reasons was Terra Firma’s acquisition of Four Seasons. RBS have received all of their stake in Alliance Boots with money back and the company will look to take advantage of an option to buy the predicted growth of 3% a year in the elderly care market. This is Terra outstanding shares in 2015. Firma’s second transaction this year of a business under the ownership Walgreen is the world’s largest pharmacy of their lenders after the acquisition of The Garden Centre Group. chain with 7890 pharmacies in the US. It seems like a great transaction for KKR & Boots. There is very little overlap between the businesses; Walgreen will take the Boots cosmetics brands to the US market further cementing Boots’ UK manufacturing business and Walgreen will no doubt benefit from owning a wholesaler.

The Overview T: 0203 327 4029 www.marblehillpartners.com 13 The private equity transaction report 2012 Quarter 2

Mid-market

Graphite, Montagu, Gresham, Phoenix, Inflexion, and LDC have all continued the theme of acquiring businesses from lenders, in this case completed transactions this quarter. Duke Street also completed the Lloyds, with the acquisition of Jaegar Group following on from the acquisition of LM Funerals, despite their fund raising difficulties, and acquisition of Everest in March. The most notable transaction and exited Adelie Foods for £350m, which represents a great outcome perhaps the one to watch is OpCapita’s acquisition of Game Group. given the trading environment in the FMCG and food services sector. The team at OpCapita, led by Henry Jackson, have significant Bridgepoint Development Capital realised the exit of Symingtons, operational turnaround expertise within the retail space so we look which has grown very quickly in recent years, to ICG for £125m. forward to monitoring the business going forward.

Another notable transaction in the healthcare space saw August Equity Last, but not least, one other transaction that caught the eye was exit Lifeways with OMERS PE completing a secondary . Although the acquisition of Hoxton Hotels by Ennismore Capital from Bridges the terms were undisclosed some reports estimated the transaction to Ventures and Pret-a-Manger co-founder Sinclair Beecham who be £207m, which if correct is a fabulous return for August founded the business in 2006. This is definitely a great start-up success story within the leisure space and it will be interesting to see if At the distressed end of the market we have seen Endless continue Ennismore can roll out the format and style of the original Hoxton, their activity this year with the acquisitions of Bathstore and Cinesite which has added a new dimension to budget hotels in London. which takes them to three transactions in 2012. Better Capital

The Overview T: 0203 327 4029 www.marblehillpartners.com 14 The private equity transaction report 2012 Quarter 2

Appointments – Portfolio

CEO

Company Sector Appointment

Encina Financial Services Encina has appointed Andrew Ward as CEO. Andrew established Reward Capital in 2010, recently selling his shareholding.

Gall Thomson Manufacture Phil Clifton former Head of Weir Group plc’s Power and Industrial division Environmental appointed CEO.

Poundstretcher Retail Richard Kirk after a short break following Peacocks collapse has been appointed CEO.

Cafédirect Retail John Steel will join on 2nd July, replacing Anne MacCaig, who left the company last summer.

Cranswick Food Cranswick chief executive Bernard Hoggarth is stepping down on 1 August after 34 years with the meat supplier. He will be replaced in the top role by chief operating officer Adam Couch .

American Golf Retail Kevin Styles (ex Habitat) has been appointed as CEO to the specialist retailer backed by Sun European Partners.

Celtic Sheepskin Retail Monique Louis , previously at Lands' End, has joined Celtic Sheepskin as CEO.

Nicole Farhi Retail Nicole Farhi, has named Francois Steiner Interim CEO.

Bathstore Retail Former MFI chief executive Gary Favell has been hired as the new boss of Bathstore after the big-ticket retailer was bought by investment firm Endless last month.

Molinare TMT Julie Parmenter appointed as new Managing Director.

Purity Soft Drinks FMCG Langholm Capital is backing Garry Nield as the new CEO.

The Overview T: 0203 327 4029 www.marblehillpartners.com 15 The private equity transaction report 2012 Quarter 2

Chairman

Company Sector Appointment

Natural Products Retail Mark Smith , founder and former CEO of Claire’s Accessories in Europe, Worldwide will join the board as Chairman.

Audley Travel Leisure Founders Craig Burkinshaw and John Brewer will remain on the board, joined by former Tui Travel specialist and Emerging Markets Managing Director Richard Prosser as Chairman.

A&A Group Financial Services Ian Chippendale will be joining A&A Group as Chairman. Previously Chippendale was Chief Executive of Direct Line and Privilege Insurance, as well as chairman of RBS Insurance.

CAP Business Services Martin McCourt was named Orange Business Leader of the Year in 2010 before joining private equity specialists Montagu in March 2012. Following their acquisition of CAP he has become Chairman.

Aspirations Care Healthcare Stephen Booty joins the board of as Chairman. Group

Molinare TMT Steve Milne , former CEO of Molinare, returns as Executive Chairman.

GCI Telecom Group Telco John Cronin appointed as Non-Executive Chairman. (GCI Com)

STATS Engineering Former Expro Executive Chairman, Graeme Coutts , takes on a Non-Executive Chairman role at STATS. His first appointment since retiring last July.

TD Travel Leisure As part of the transaction, Dick Porter , a co-founder of STA Travel and previously Chairman Griffin Travel, has joined the business as Non-Executive Chairman.

Quilter Financial Services Quilter has added former HSBC Private Banking Head, Chris Meares as a Non-Executive Chairman.

The Overview T: 0203 327 4029 www.marblehillpartners.com 16 The private equity transaction report 2012 Quarter 2

Chairman (continued)

Company Sector Appointment

The College of Law Education Montagu has appointed Sir Tim Wilson , former vice chancellor of the University of Hertfordshire, as a Non-Executive Chairman.

Rex Restaurants Leisure John Botts former United Business Media Chairman joins the Board as Non Exec Chairman Non-Executive Director

Rex Restaurants Leisure Karen Jones former CEO of Spirit is expected to join the Board of Rex Restaurants. as Non-Executive

Purity Soft Drinks FMCG Peter Unsworth has been appointed as a Non-Executive Director. Chief Financial Officer

STATS Engineering Leigh Howarth , former managing director of Petrofac Training Services, has joined the STATS Group board as chief financial officer.

MiiCard Technology Graham Paterson , one of the founding partners of SL Capital Partners and current chairman of VCT 4, has been named CFO of MiiCard.

The Overview T: 0203 327 4029 www.marblehillpartners.com 17 The private equity transaction report 2012 Quarter 2

Appointments – Private Equity

Company Appointment

Terra Firma Kamal Tabet , head of investor relations for Terra Firma, has left the firm after 11 months.

Morgan Stanley Private Equity Brian Magnus , formerly Managing Director and Head of Morgan Stanley's private equity business in London, has left the company.

3i Group 3i Group has officially appointed Simon Borrows as CEO, taking over from Michael Queen with immediate effect.

HIG Group Mid-cap private equity house H.I.G. Europe has hired ex-Hg Capital Carl Harring as Managing Director in its London office.

Arle Capital Partners Arle Capital Partners has hired Roumyana Boshnakova and Senka Jeremic as Investment Managers.

YFM Equity Partners Andrew Marchant has been appointed Non-Executive Chairman of YFM Equity Partners.

Growth Capital Partners Growth Capital Partners (GCP) has appointed Richard Shaw as Investment Manager.

Bridgepoint European private equity firm Bridgepoint has appointed Christian Streiff to its advisory board.

Maven Capital Partners Maven Capital Partners has appointed Ben Bolt as Investment Director, formerly of Catapult Venture Managers.

Gresham Mid-market private equity firm Gresham has appointed Adam Rudd as Investment Manager.

The Overview T: 0203 327 4029 www.marblehillpartners.com 18