PHD Equity Partners shows the art of the deal with £4m investment

A supplier of arts materials which runs a well-known membership club for artists has received a £4m investment from PHD Equity Partners and Praetura Commercial Finance to fund its expansion.

Teaching Art Limited supplies an extensive range of paints, inks and other products from its premises in Newark and Manchester. However, it is best known as the company behind the SAA, formerly the Society of All Artists, which with over 43,000 members is believed to be the world’s largest art community.

Established 25 years ago, the SAA runs its own exhibitions, awards and events. Members range from amateurs and art clubs to professionals and art teachers, and receive a whole range of benefits including the magazine ‘Paint’.

Teaching Art also sells art and craft materials to the public through its Artifolk and SAA websites and supplies leading retailers including Hobbycraft and Ryman via its trade company Artcoe. It is one of a limited number of UK businesses to be accepted as an Amazon Prime supplier. The company has its own TV studio in Newark where it produces material for its digital channels, and ‘live’ streaming.

Teaching Art was set up in 1986 by John Hope-Hawkins and the SAA was launched in 1992. The company now employs over 60 staff and is run by the founder’s son Richard Hope-Hawkins,  Managing Director, and Jean Ellison, Finance Director, who will be staying on to help PHD implement its growth strategy for Teaching Art.

PHD Equity Partners is the private equity arm of Dow Schofield Watts. This latest investment follows its recent investment in Olympic Fixings and its successful exit from Barber of Sheffield, Europe’s leading tattoo ink supplier. It spent four years scaling up the Barber business before selling it for a significant return in 2016.

Andy Dodd and Craig Richardson led the deal for PHD Equity Partners. Andy Dodd said: “Arts and crafts is a fast-growing market, driven in part by the general increase in leisure time for everyone, but particularly the “empty-nesters” and the newly retired. Teaching Art is well established business with an enthusiastic and loyal customer base and a highly  efficient distribution network.

Craig Richardson added: “We see huge potential to increase engagement with SAA members, develop new products and services and expand sales in Europe and beyond. We look forward to working with the management team as the company enters this exciting new stage in its growth.”

Rob McCarthy of Dow Schofield Watts Transaction Services carried out financial due diligence and Keith Miller and Nick Woodward at Dow Schofield Watts VAT and Tax Services provided tax advice to PHD Equity Partners. Ian Riggs and Sean Lightfoot from the corporate team at Hill Dickinson provided legal advice to PHD while the banking team at Bermans advised Praetura Commercial Finance. Vista provided insurance due diligence and Sanderson Weatherall carried out stock and AR valuation.

Travel firm scoops top award for 15th time

A Manchester-based travel company which specialises in tailor-made holidays to Canada, Australia, New Zealand and the USA has won a top industry award for the 15th year in a row.

First Class Holidays was named Best Tour Operator to Canada at the British Annual Canadian Travel Awards. The award is given to the operator voted by travel agents to offer the best service and value. It comes as the company, which is backed by PHD Equity Partners, achieved its most profitable month in its 21-year history following a period of growth and development.

First Class Holidays was founded in 1996 by the current management team, Paul Ainsworth and Sharon Mason, and now employs over 40 people at its headquarters in Trafford Park. PHD Equity Partners invested £2.5m in December 2015 and has since been working with management to develop and grow the business.

The company has recently rebranded, launched a new website – www.fcholidays.com – and taken up further office space at its head office in near Old Trafford. It has also made a number of key appointments including Steve Taylor from Trailfinders as Brand and Strategy Manager and Paul Bland from LDC backed Airline Services as Finance Director.

Andy Dodd of PHD Equity Partners said First Class Holidays was well placed to benefit from for the growth in the ‘grey pound’ and the increased demand for destinations such as Canada and New Zealand.

“Baby boomers are more adventurous and affluent than previous generations and account for a growing share of the holiday market,” he said. “They are seeking authentic experiences but also appreciate comfort. With its tailor-made trips and excellent service, First Class Holidays is perfect for their needs.

“Meanwhile with fears over terrorism and political instability, travelers will continue to seek out ‘safe’ destinations such as Canada and New Zealand. No-one knows these markets better than First Class Holidays and, as the award shows, no-one offers better service and value.”

The award was presented at a ceremony at Canada House in London and hosted by Destination Canada. Paul Ainsworth, Managing Director, commented: “To be consistently voted top operator by travel agents demonstrates our dedication to high levels of service and total commitment to the independent travel trade. This award belongs to all the team at First Class Holidays who go the extra mile every day to ensure we give truly outstanding service.”

Tattoo supplies firm in secondary buy-out

barber-brochure

A business which was founded over a century ago by the UK’s first celebrity tattooist and is now Europe’s leading supplier of body art products has changed hands in a secondary buy-out.

Barber of Sheffield has been sold by PHD Equity Partners and Enterprise Ventures to RJD Partners in a deal which represents a significant return on investment for the vendors equating to an internal rate of return (IRR) of 44.5%. PHD Equity Partners and Enterprise Ventures backed the owners Tony and Stephanie Crane in a “cash-out scale-up” investment in March 2012.

Barber supplies a range of inks, needles, equipment, aftercare and hygiene products to over 30,000 individual accounts across 67 countries worldwide under the Barber DTS trade name. The company, which employs around 45 people in Barnsley, also provides specialist equipment and products to the medical and veterinary markets.

Its history dates back to 1900 when George Burchett-Davis opened a shop in the Isle of Dogs. George ‘Professor’ Burchett, as he was known, became one of the most famous tattoo artists of his day with clients including George V, King Alfonso VIII of Spain and King Frederick IX of Denmark. His business, Davis Tattoo Supplies (DTS), was passed on to his sons.

In 2006 it was acquired by Barber of Sheffield, which had been set up by husband and wife Tony and Stephanie Crane in 1990 as a medical supplies business but which had moved into the growing body art market.

Following the investment by PHD Equity Partners and Enterprise Ventures, Barber has been scaled up in partnership with the Cranes and transformed from a UK catalogue store to an export-focused e-commerce business. The company now operates sites in ten European languages and generates around 70% of its revenue online.

The business has doubled its EBITDA over the past three years through a combination of organic growth, fuelled by investment in premises, international websites and management, and acquisitions including that of French company Northstar Tattoo Supply in 2012 and Hull-based Powerline Tattoo Supplies in 2015.

In 2014 Richard Boston from Shop Direct joined as Managing Director while Craig Burns moved from Sheffield United to become Finance Director. Tony Crane will stay on as a Director of the company under RJD Partners’ investment.

Andy Dodd of PHD Equity Partners said the management had developed a strategy to more than double revenue by 2019. “Barber has long set the standards within the tattoo industry and built a reputation as a responsible ethical supplier. With a strong management team and the right infrastructure in place, it is well placed to continue its expansion into Europe” he said.

Wayne Thomas of Enterprise Ventures said: “With a large number of small suppliers and few big players, the growing body art market offers major opportunities for consolidation. Barber has a proven track record to buy and build, and enter new territories. The current management team are now keen to lead the next stage of the company’s growth and RJD makes an ideal partner to support their ambitions.”

An estimated 20 million people in the UK and 100 million in Europe have at least one piece of body art. The US market, which is more mature than the UK, continues to grow at 10% a year.

Dave Graham and Pete Barkley of Dow Schofield Watts provided corporate finance advice to the vendors, while Ian Riggs, Craig Scott, Jonathan Gillow and Rhian Hughes of Hill Dickinson provided legal advice and Colin Smyth of RSM advised on tax.

PHD Equity Partners Fund No. 2 (“Fund 2”) – Completion of First Investment

PHD Private Equity, the private equity fund focused on investing in “scale up” business opportunities has invested £2.5 million in 1st Class Holidays – the UK’s leading provider of luxury tailor-made holidays to Canada based in Manchester.

canada image

The £2.5 million investment will accelerate the growth ambitions of the company and will provide an exit for Finance Director and shareholder Henri Treffers.

The business will continue to be led by Paul Ainsworth and Sharon Mason, who originally founded the business in 1996. The company, currently with a turnover of £16m, is based at Trafford House in, Manchester, and employs 36 people. It offers an extensive selection of luxury tailor-made holidays focused on Canada, North America, New Zealand and Australia. 1st Class Holidays has won “Favourite Tour Operator” a record 13 times at the British Annual Canada Travel Awards.

The deal was led by PHD Equity partners Andy Dodd and Craig Richardson and director Tony Meakin.

Paul Ainsworth commented “Over the last twenty years we have built a high quality service offering and established a strong market position particularly in Canada, The backing from PHD and its partnership approach will give us an even stronger platform to accelerate our plans and take our business to a new level. It is great to be working with an enthusiastic team who share our conviction that our business can be scaled up.”

Andy Dodd, partner at PHD Equity, said: “We are investing in a well-established travel business, operating in the luxury tailor-made end of the market, and backing a remarkable management team who have created their own niche in Canada. We are looking forward to working with Paul and Sharon to meet their growth plans for the business.”

The deal is the first transaction by PHD from its second private equity fund, which had its final close earlier this year at £20 million.

James Dow, Managing Partner of PHD Equity Partners said: “Our investment in 1st Class meets our aspirations to invest on a partnership basis with good management teams to scale up businesses with discrete competitive advantages.”

Jonathan Robinson of DWF provided legal advice, DSW Transaction Services provided financial due diligence and RSM provided tax advice for PHD Equity Partners.

The vendors were advised by Benchmark International, BPR Heaton and Ward Hadaway.

PHD Equity Partners completes the first closing of PHD Equity Partners Fund No.2 at £16.5million

PHD Equity Partners (“PHD”) has reached a first closing of £16.5million for its second private equity fund, PHD Equity Partners Fund No.2 (“Fund 2”) and will commence investing it from January 2015.

Fund 2 has a target of £25million and is backed by a diverse group of high net worth individuals, alongside the PHD partners who will be investing over £2million themselves.  PHD will continue to market Fund 2 early in the New Year and given the strong interest, it is expected that the fund will reach its target size by its final close in March 2015.

Fund 2 will build on the firm’s very successful strategy of investing in established smaller UK businesses with the capacity to “scale up”. The investee companies will typically have valuations of less than £10million with PHD providing equity cheques of up to £4million.  PHD’s maiden fund, PHD Equity Partners Fund No.1 LP (“Fund 1”), is on target to deliver strong returns to its investors and completed its final new investment, Modern Rugs, earlier in the month.

PHD invests in businesses operating in a broad range of industries including manufacturing, distribution, and consumer and business products and services.  The PHD investment team has extensive financial and operating experience and works closely with the management teams of its portfolio companies to enhance value.

James Dow, Managing Partner of PHD commented, “We are delighted with the support we have received from investors which we see as recognition of the high quality of our team, the value created within our existing portfolio companies and the strong performance of our past investments. Having now completed our final investment from Fund 1 we are excited about finding new businesses for Fund 2 to help “scale up” in 2015. Our successful fund-raising for Fund 2 is a hugely significant step forward in our ambitions to create a truly unique proposition for investors and investee companies.”

Andy Dodd, Partner of PHD also commented, “There is a large population of attractive SMEs in the UK, with real potential for value creation and a need for strategic investment to facilitate growthOver the last six years our team has built an impressive track record, showing real ability to invest and exit investments maximising investor value and we firmly believe the team at PHD can continue this trend.”

About the Dow Schofield Watts Group

Established in 2002 the Dow Schofield Watts Group provides a broad range of professional services, including corporate finance, transaction services, business recovery, management and strategy, VAT advisory, forensic services and equity finance.   www.dswcf.com

PRESS RELEASE | PHD Equity Partners backs £3.2m management buy-in of UK’s leading online rug retailer

PRESS RELEASE

Online rug retailer set for growth after £3.2m buy-in

Modern Rugs – the UK’s leading dedicated online rug retailer which is based in Co Durham (URLs: www.modern-rugs.co.uk and www.sisalrugs.co.uk) – has undergone a £3.2m management buy-in backed by Enterprise Ventures and PHD Equity Partners.

The deal gives operational control of the company to Martin Tragen, former group finance director of retailer Timpson. It also allows the 33-year-old founder Ben Dale to release capital from the business although he will continue to hold an equity stake and will remain with the business in the full-time role of Technical and Marketing Director.

Ben set up Modern Rugs in 2004 as a marketing graduate using contacts introduced to him by his parents Peter and Sue who ran a carpet business in Bishop Auckland. The company, which is now based in a 5,000 sq ft facility at Aycliffe Business Park, offers an extensive selection in over 20,000 different design and size combinations catering for all tastes and markets and with prices ranging from below £50 to over £1,000.

Its market-leading website, which includes innovative features such as unique “feel-the-pile” product videos, has enabled it to remain firmly ahead of the competition. The company sells over 25,000 rugs per year to a customer base consisting of domestic and trade clients and the interior design industry.

Martin Tragen, who becomes Managing Director of Modern Rugs, spent 19 years at Timpson during its growth from 160 to over 800 outlets with services expanding from cobbling to watch repairing. Prior to the buy-in he has been involved in a number of turnaround projects, the most recent being Total Fitness, the health and fitness club chain.

Mike Seery, the former head of corporate recovery at KPMG in the North West, is investing alongside Martin Tragen and will take on a Non-Executive Director role.

The transaction was funded by Enterprise Ventures, investing from the Coalfields Growth Fund, and PHD Equity Partners, along with the incoming management team.

Wayne Thomas, who led the deal on behalf of Enterprise Ventures, said: “Ben has done a remarkable job of building a business which he started in his bedroom into the UK’s leading dedicated internet rug retailer. Martin’s appointment will bring additional structure that will be required for further growth, which will in turn allow Ben to focus on the digital and creative side.”

Craig Richardson of PHD Equity Partners said: “Since being introduced to Ben by Martin and Mike eighteen months ago we immediately liked the business model and what Ben had achieved on his own.  We look forward to working with Ben, Martin and Mike in the future to build on the success to date.”

PHD Equity Partners LLP announce the fund raising of a second private equity fund – Fund No.2 LP

PHD Equity Partners LLP (“PHD”) announces today that it has launched its second private equity fund, PHD Equity Partners Fund No.2 LP (“Fund 2”). The firm is currently fundraising and expects to reach its target size of £25 million this year.

Fund 2 will build on the firm’s very successful strategy of investing in smaller UK businesses, with valuations of less than £10 million.

PHD’s maiden fund, PHD Equity Partners Fund No.1 LP (“Fund 1”), is on target to deliver an IRR for investors (net of all fees) of 24.6%.

Highlights of Fund 1 include the sale of Liberty Services to Capita plc for over 9 times the sum invested and the recent sale of ESG to SSE plc.

Fund 2 will again target investment into UK businesses, typically with a valuation of up to £10 million. In keeping with Fund 1, the partners of PHD expect Fund 2 to be exclusively supported by commitments from high net worth individuals, alongside the PHD partners who will be investing a minimum of £1.75 million.

The initial close of Fund 2 will be mid-December 2014.

James Dow, Managing Partner of PHD, commented, “The exceptional performance of Fund 1 has created strong support from our existing investors to grow and develop our investment business in this dynamic group of UK companies.”

Andy Dodd, Partner of PHD, commented “Through Fund 2, we will continue to build on the success of our proven capability to partner with emerging growing businesses and implement operational change and strategic initiatives to accelerate growth and enhance shareholder value.”

James Dow further commented, “I am extremely proud of the team and the track record we have built over the past six years. Our ability to invest and exit investments to generate attractive returns over this economic cycle is a testament to our capability to create investor value.”

PHD Equity Partners LLP is delighted to announce the appointment of Adam Dow as Investment Executive

Adam Dow

To support investor relations and new business generation, PHD Equity Partners LLP, the smaller company private equity investor, today announces that it has expanded its investment team with the recruitment of Adam Dow.

A business graduate of Leeds, Adam Dow joins as an Investment Executive, with a remit to identify investment opportunities in smaller unquoted UK businesses.

Andy Dodd, a founding partner of PHD Equity Partners, commented: “We are delighted to welcome Adam to PHD Equity Partners. His appointment reflects our continuing success and commitment to grow our own business whilst providing strong returns to investors.”

PRESS RELEASE | Bridgepoint Development Capital and PHD Equity Partners complete £66m sale of The Energy Solutions Group

PRESS RELEASE 
Bridgepoint Development Capital and PHD Equity Partners have completed the sale of The Energy Solutions Group, the leading provider of energy management solutions to SSE plc for an initial consideration of £66m. ESG works with both private and public sector customers to provide solutions that reduce energy consumption, minimise costs and create sustainable energy savings. ESG whose customers have property portfolios ranging from single buildings to very large complex estates will continue to be led by the existing management team and will join the SSE Enterprise division which is seeking to service the wider energy needs of industrial and commercial customers. At a time when managing energy costs and environmental impact are key priorities for businesses ESG can typically save customers in excess of 20% of their energy consumption reducing carbon footprint.
 
DSW Corporate Finance Limited acted for ESG and Bridgepoint Development Capital on the transaction. Mark Watts commented “We are delighted to have advised ESG and Bridgepoint on the transaction with SSE plc. The business is a fast growing solution provider in the developing market for business to business energy services. The Group’s energy data analytics capability together with the team’s technical energy management skills proved a key attraction to SSE in its strategy to make the consumption of energy more sustainable.”
 
Andy Dodd from PHD Equity Partners commented “We invested in ESG in 2011 as we believed in the growth potential of the energy management market and the strong market position of ESG, the management team have developed a range of energy services capability that has delivered excellent growth and positions them to develop strongly under the ownership of SSE”
 
ESG were also advised by Laytons (Legal – Company), Gateley (Legal – Management), Dow Schofield Watts Transaction Services (Vendor Due Diligence)
 

 

Director promotions at Dow Schofield Watts

James Dow Dave Graham Tony Meakin 1


Dow Schofield Watts, the specialist professional advisory and equity finance firm, have recognised the outstanding contribution by two of its team in its North West Office.

Dave Graham and Tony Meakin have been promoted to director level.

Mr Graham, a Chartered Accountant and graduate of the University of Liverpool, joined Dow Schofield Watts Corporate Finance in 2007.  Since then he has been involved in a number of high profile M&A deals, provided clients with board level strategic assistance in respect of funding, acquisition strategy, group structuring, management reporting and working capital management, and leads the firms involvement with the Sci-tech science and innovation campus.

Oxford graduate, Mr Meakin, joined directly from Ernst & Young, becoming part of the backbone of the DSW Corporate Finance team in 2007 and an instrumental player in the development of the Firm’s fund activities.  Over the last seven years, Tony’s contribution has been invaluable in numerous high profile transactions, gaining significant experience in financial modelling and is heavily involved in the operations of PHD Equity Partners.  Tony becomes a director at PHD Equity Partners.

James Dow, founding partner of Dow Schofield Watts, said: “These promotions are richly deserved, both Dave and Tony have developed industry wide experience working with the North West investment community.  Their contribution to the development of Dow Schofield Watts Corporate Finance and PHD Equity Partners has been phenomenal, and a key driver in the growth of our business.