2/02/2017

Rcapital Investment Update

The start of the year is a time for resolutions and predictions but who would have been brazen enough to predict how 2016 panned out? Some may have misjudged that a vote for Brexit was a vote for recession, however as inflation hits a two-year high there are plenty of signs to suggest economic pains have been delayed rather than averted.

Our COO, Phil Emmerson joined a panel of experts at the TMA’s Annual Turnaround Review / Preview on 11 January. Panellists and guests were all in agreement that inflation is set to rise, fuelled by the sharp fall in the pound, but the great unknown is whether wage inflation can stay ahead of general price inflation.

Fanning concerns are other threats beyond Brexit such as Trump’s promise of a huge fiscal stimulus and threats to upend the global trading order, the Italian banking crisis and crucial elections in Europe.

Despite all this uncertainty, there is still a large sum of capital that needs to be put to work meaning the investment landscape is increasingly competitive with well-funded buyers and investors. An experience that Rcapital has taken from 2016 is that cash is increasingly becoming a commodity – now more than ever it is the skills and experience, as well as funding that makes for a compelling case for turnaround and transformation. Building on our talented team, Rcapital have further invested in new recruits Josie Richardson and Alastair Dean from Deloitte, and most recently technology operator James Warburton focusing on using tech to build value across the portfolio.

Investment Summary

In 2016 we invested in four deals across a wide range of industries and completed eight successful portfolio exits this year. The success of these investments were recognised by two prestigious industry awards; winning the TMA European Turnaround of the Year and the IFT Investor of the Year.

A thank you to everyone who has supported us in 2016 and we are looking forward to working with you in what already looks to be a busy 2017.

If you would like to know more about Rcapital investments and how to secure funding or you know of a business that is in pursuit of investment, please contact us.

Investment Update


BUY AND BUILD

Systems Training: UK’s largest national logistics and training provide.
Industry: Labour supply and training.
Investment strategy: Well positioned to take advantage of the opportunities that arise from the upcoming apprenticeship levy, actively looking for opportunities to add to the business.


EXPAND THROUGH AQUISITION

A&GP: Leading importer and distributor of IT networking, cabling and power products.
Industry: IT network cabling.
Investment strategy: Looking to consolidate A&GP’s position in the market and to support growth through investment in sales and marketing.


EXPLOIT MARKET OPPORTUNITIES

Independent Group: Group of 3 businesses (Ansa, Independent Inspections and ChemDry) that provide consolidated claims management outsourcing services via expert validation, for all major UK insurers.
Industry: Insurance.
Investment strategy: Stabilise, optimise and grow each business. Resolve integration issues, create a consistent offering and maximise sales opportunities to maximise market value of individual companies and the Group.


GLOBAL GROWTH

Green’s Limited: Specialises in the design and manufacture of economisers and waste heat recovery systems to the power generation, petrochemical, marine and industrial sectors around the world.
Industry: Heat transfer products.
Investment strategy: Growth strategy into global markets helped by weakened sterling. Build and demonstrate profitability for potential future exit.


Key 2016 Exits


SOLD TO FTSE LISTED GROUP

UK’s leading signalling, electrical engineering and specialist building services business was acquired by Renew Holdings PLC. It now forms part of the Engineering Services Group supporting UK infrastructure and is listed on FTSE AIM 50.


ACCELERATED PROFITS

Within 18 months, Summit achieved over 370% growth in profit. The company was sold to TCC Global, a leading global retail marketing company in a partnership set to create a new generation of digitally-led marketing programmes for retailers. TCC runs campaigns in more than 70 countries, operating from 34 offices around the world.


FLOATED ON AIM

IFT award-winning merger and integration to create Morses Club PLC, which achieved a day one valuation of £140m when it listed on AIM.


INTERNATIONAL CAPABILITY

Twogether quickly achieved accelerated growth, with turnover doubling and profits quadrupling.  In April 2016 Twogether Creative was sold to the AIM-listed digital communications group Next 15, which will enable Twogether to pursue growth in the US.


We are particularly interested in hearing about businesses that:

  • Turnover £5m-£200m
  • Are looking for a £2m-£20m investment and business transformation
  • Are experiencing challenge through event-driven change, sub-optimal operations or financial stress.

All the best for 2017,
Jamie Constable
CEO

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