Palatine pumps £16m into Forrest secondary buyout
PRIVATE equity firm Palatine has invested £16m in a secondary buyout at North West social housing contractor Forrest.
In addition to Palatine buying in to the Bolton-based business, Forrest has raised £26m in senior debt and working capital facilities from RBS and Santander.
The deal sees LDC, which first backed Forrest in 2007, sell-down most of its stake with a return of 2.4x its original investment. Together LDC and Palatine have a majority stake in the business.
Under LDC’s stewardship Forrest’s turnover has rocketed from £38m to more than £100m.
Forrest is a provider of refurbishment and responsive maintenance services to social housing providers. Customers include Bolton at Home, City West Housing Trust, Salix Homes and Blackpool Coastal Homes.
Forrest, has an order book worth £1.2bn and its sales grew by almost 50% in 2012. The business employs around 500 people and also operates a responsive maintenance division from a site in Leeds.
Palatine managing partner Gary Tipper, partner Ed Fazakerley and investment manager James Winterbottom led the deal.
Both partners will join the Forrest board as non-executive directors. Bob Holt, chairman of social housing company Mears Group will become non-executive chairman, replacing Robert Morgan in the role.
Ed Fazakerley said: “Management has succeeded in broadening the business offering in order to capitalise on the significant new-build and renewables opportunities that are available in the social housing arena. We are looking forward to working closely with Lee and the management team to exploit these growth opportunities.”
Forrest chief executive Lee McCarren, added: “LDC, led by Jonathan Bell, have been a hugely supportive partner for the business over the past six years. With Palatine alongside us as an additional investor, we can continue to drive improvements in the quality of our customer service offering, as well as developing more new and complementary service lines.
“This on-going strategy has been the key to our many consecutive years’ growth and to our strong, long-term customer relationships.”
Jonathan Bell, of LDC, who will remain on the board at Forrest, said: “We have supported Forrest’s consistent growth in the social housing support services sector and its transition into the leading regeneration specialist in the North of England.
“We are committed to working with Palatine to continue to support the business as it further develops its environmental services offering and targets new framework opportunities.”
LDC and management advisers included Deloitte (partners Paul Trickett and Jodi Birkett) and Dave Foreman of Praetura Capital.
RBS and Santander Structured Finance provided senior debt and working capital facilities of £26m. The RBS team was led by Tony Dean and James Adams and the Santander team comprised Chris Thomas and Paul Wickers.
Rebecca Grisewood of Gateley provided legal support to Palatine and Jonathan Robinson and Darren Ormsby of DWF acted on behalf of LDC and management. Richard Oman of Addleshaw Goddard advised the banks.
The deal is Palatine’s fourth investment from its second fund, which achieved a final close of £150m in June.
