Amiri targets eighth deal in 12 months
AMIN Amiri’s A2E Venture Catalysts investment firm has completed seven deals in the past 12 months and has its sights set on an eighth – a Wigan aerospace parts business.
At A2E’s annual convention yesterday Mr Amiri would not name the company but it is likely to be BHW which went into administration in March. He said A2E was in a race with the private equity firm Hilco.
BHW supplies components to firms like GKN, Airbus and Bombardier and had sales of £11.4m, according to the most recent filed accounts for 2011.
A2E, which usually buys companies and gifts 25% of the shares to management, has a track record of acquiring failing manufacturing businesses, and picked up Coventry-based engineer Lightning Aerospace in August.
Other deals conducted in the past year include Middleton-based latex manufacturer Industrial Latex Compounds, Ellesmere Port-based commercial glazing firm Formes Alutek, Holmes Chapel IT business Kodit and Herfordshire-based wallcoverings company Muraspec.
Mr Amiri, pictured, told a collection of guests and company representatives that the initial rate of return (IRR) on the investments since 2001 was 96% a year, largely because many of his targets are turnaround cases and are making a loss when he gets involved.
He said: “But you need balls, conviction, money, intelligence and an acute sense of spotting value and there isn’t much of that in the British Venture Capital Association as a whole.”
He added: “Private equity has a reliance on fractional improvements in earnings. They’re very good at monitoring things, but they’re not creating wealth. They invest in the same things and overpay, and mitigate that with high leverage.”
In contrast he said A2E’s ethos was to acquire assets at realistic prices, implement a strategic vision and gives hands on support. “The management teams are our partners”.
Mr Amiri said he hoped this approach would see the value of the group’s 14 companies hit £100m in the next four years. The combined turnover of the businesses was £82m last year and should rise to £90.4m in 2013. Earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to rise to £8.5m from £5.8m.
Before launching A2E Mr Amiri led the corporate finance team at Grant Thornton in Manchester.
Reminiscing about the launch of the business he said: “It all started because I was fed up with Grant Thornton, not because it’s a bad firm – it’s better than many others. But because I had this feeling that every year I would start with zero. I was sitting in a restaurant in Boston and I wrote out a business plan, which I still have, on one piece of paper.
“I started with £50,000 of capital – which I didn’t use – and bought my first stake for £3,000 and my second for £10,000. The next two I paid a pound.”
The evening began with a presentation by economist Professor Patrick Minford, a former adviser to Margaret Thatcher, who argued that the financial crisis was a natural conclusion to a long boom, rather than irresponsible lending by the banks. “You don’t get 25 years of growth without trouble… after 25 years you run out of raw materials and that’s what happened in the mid 1970s.”
He said the government should stop regulating the banks because it is hindering lending rates. He also wants to see an end to quantitative easing, or money printing, a return to normal interest rates and weaker employment rules.
Mr Amiri also gave his view on the crisis. He argued there was a “devastating dearth of leadership, intellect and vision everywhere – amongst politicians, business leaders and bankers.”
“The government has not provided any leadership. Osborne’s analysis was too simplistic and misunderstood the issues. He thought it was about austerity and deficit reduction. He forgot about productivity. If you focus on one issue you’re going to get it wrong.” He said the government should focus on investing in infrastructure, enhancing competition, supporting small business and reducing red tape.