Glass group’s royalty financing deal hopes to shatter expectations
Walsall manufacturing group Brownhills has secured a £7.5m finance deal to support taking full ownership of a subsidiary and refinancing its existing debt.
It has bought the remaining 70% stake in Tufwell Glass, a West Sussex-based specialist supplier of glazed partitioning, primarily servicing the London office market.
Brownhills is headquartered in Aldridge, at Brownhills Glass, while the group also includes PLG in the north east. It employs 130 people across the group.
The finance deal has been agreed with Duke Royalty, an alternative finance provider whose return is based on the subsequent performance of the business.
Mark Harrison, group managing director of Brownhills, said: “At Brownhills, we have a clear plan to grow both organically and via acquisition and we are happy to have a supportive and aligned financing partner in place for the long term.”
Brownhills has drawn down £6.5m immediately and has an option on a further £1.0m until the end of 2019.
It is the second West Midlands deal in two months for Duke, which invested £9m in Trimite Global Coatings in March. The finance provider, which is listed on the stock market, has now invested £30m in four UK businesses.
Neil Johnson, chief executive of Duke Royalty, said: “This underpins our plan to bring an alternative finance solution, which represents a £50 billion sector in North America and does not carry re-financing risk and is non-dilutive for owners, to UK and European businesses.
“In terms of our investors, this deal once again provides access to a well-run private company. Mark and Nick Harrison’s proven business acumen and increased equity ownership means that they are aligned with us to deliver continued growth over the long term.”
The 30-year secured financing generates an initial cash-on-cash yield of more than 13% per annum.