Peter Barrand joined Newable Capital – the private equity arm of investment and advisory firm Newable – in November 2019. He was previously at Ignition Corporate Finance, which he co-founded in 2012. Prior to that, he spent three years at HMT Corporate Finance as a partner, and was corporate finance director at PwC. Newable Capital is a member of the Corporate Finance Faculty.
What is the deal?
Our investment in London Fire Solutions (LFS), which is a UK market-leader in the supply of passive fire protection products and services to the construction industry. It is based in south London and was founded in 2011 by Jim Hannon with another investor, who isn’t involved in the management of the business.
They’ve built a solid customer base in both the private and public sectors across London and the South East.
What were the timescales?
We were introduced to the business by KBS Corporate in November 2020, and we completed the investment in March this year.
Because LFS’s services are crucial to improving safety for residents, the business continued to trade all the way through lockdown, although it was not able to access all sites.
We met with the two owners and the management team throughout the process, which was invaluable to improving our understanding of the opportunity. Hannon had built LFS from scratch and needed to be sure that we’d be the right partner for the business. When we’re trying to persuade people that we’re the right investor, we really do need to spend time physically with them, getting to know them.
What will the investment be used for?
There’s much more focus on the security and fire protection market than previously. LFS installs fully accredited fire doors and fire protection products to local authorities, housing association providers and private developers, and then provides the essential maintenance and testing. Despite the impact of COVID-19, LFS has seen considerable growth over the past two years.
Newable Capital’s investment, with further support from Santander, will enable the business to move to a substantially larger manufacturing site – 25,000 sq ft – in Gillingham, Kent, and invest more than £1m in the latest machinery to improve and expand its production processes. The big attraction for us was not just that it’s a very successful family business, but that it’s an opportunity to invest in its future.
Who were the advisers?
LFS used KBS Corporate as lead adviser. We used an in-house team for financial due diligence, and Carter Lemon Camerons, a specialist local London law firm with real expertise in small and mid-market private equity. LFS’s auditor was McKenzies.
What was the structure of the deal?
The business was run as a partnership. We acquired the assets, creating a limited company, with an equity investment, which bought out the ‘silent’ shareholder. Our investment secured the lending from Santander. Jim retained his stake in the business, and stayed on as managing director, with the senior management team.
What were the challenges?
When buying the trading assets of a partnership, as opposed to simply buying the shares, there are always complications. That involved some negotiation and structuring work. They’ve got some very loyal customers and our long-term investment horizons were really important to them.
What were the lessons learned?
Early engagement with Jim and his team really helped. We’re committed to supporting the UK manufacturing sector, investing in companies that show true differentiation from the competition. Everyone in the business, not just the owner, understood why we were interested in investing and what we could bring. There was a good feeling about the future by the time we completed the deal.