The South West and Wales team of the UK’s leading mid-market private equity firm LDC completed transactions with a combined value of more than £280m in 2021.
In its annual performance summary, LDC, the private equity arm of Lloyds Banking Group, said it will increase its support for mid-market firms across the South West and Wales, underpinned by a commitment to invest in at least 100 medium-sized businesses nationally over the next five years.
In 2021, the LDC team – which has offices in Bristol and Cardiff – invested in Bristol-based digital media company Hybrid and Sohonet, a leading international provider of connectivity, collaboration software, media services and network security for the media and entertainment industry.
The firm also exited its successful four-and-a-half-year partnership with water-based heating systems specialist ADEY. Following LDC’s investment in June 2016, the Gloucestershire-headquartered business went on to develop new products, strengthen its commercial water-testing service through its acquisition of Alpha Scientific, add additional sites, and open a new, purpose-built manufacturing and distribution facility – growing net revenues from £34m to £51m in the process.
In addition, LDC helped its portfolio companies to grow through a series of acquisitions, this included supporting HSL Compliance, an SGI company, to acquire Albany Oak Limited, an established water and effluent treatment specialist based in Wales. The transaction expands SGI’s services into industrial water treatment. LDC also supported Zip World to launch a multi-million-pound new site in South Wales.
Dewi Hughes, Partner and Head of the South West and Wales at LDC, said:
“The team’s activity during the last 12 months is testament to the strength and resilience of management teams based in the South West and Wales that are continuing to target growth.
“As we enter 2022, we are confident and enthused about the prospects for mid-market firms in the region. We are committed to increasing our support for these businesses to help them to bring their ambitions to life.”
Nationally, LDC backed 19 new management teams and invested more than £400m during 2021, despite continuing disruption caused by the Coronavirus pandemic. It also provided additional capital to existing portfolio companies to complete 65 acquisitions, helping them to scale and diversify.
Across the UK, LDC generated over £870m of proceeds from a total of 18 exits during the year with an average money multiple of 2.5x which it said underlined its value-adding approach. The companies it sold on average increased revenues by 64% and grew employee numbers by 60% during their partnership with LDC.
Commenting on LDC’s performance, LDC Chief Executive Toby Rougier said:
“Despite the ongoing challenges in many parts of the economy, our teams increased investment and support into mid-market companies across all the regions of the UK.
“As the UK looks to recovery and growth, this army of medium-sized companies will be critical. It is the backbone of British business and the engine room of our economy, teeming with talent and packed with potential. Given their ability to scale, these are the companies that, with the right support, can turbo-charge the recovery.”
LDC has also committed to ensuring its investment activity makes a meaningful contribution to the UK’s environmental and social challenges. The firm has pledged to ensure its own operations are net zero by 2030 and to support portfolio companies to reduce emissions by 50% in the same timeframe.
LDC’s partnership with The Prince’s Trust – which helps young people across the UK explore and launch their own business through start-up grants, volunteering and mentoring – has supported more than 1,600 young entrepreneurs in the last three years.