NorthEdge in secondary buyout of Arthouse

PRIVATE equity firm NorthEdge Capital has completed the secondary management buyout of £25m turnover home decoration supplier Arthouse.

The deal for an undisclosed value sees NorthEdge take a majority stake in the business, and provides an exit for Total Capital Partners, which invested in the Lancashire company in 2007.

Rossendale-based Arthouse is one of the largest providers of wall coverings and home decoration products in the UK, supplying to major retailers including B&Q, B&M, Wilko and Homebase.

Since Anita Kenyon led the first MBO of Arthouse in 2007, the business has delivered solid growth, increasing its annual turnover from £17m to £25m and its employee base from 37 to 65.

The management team has worked with Total Capital to diversify its product lines, sales channels and supplier base, and to expand internationally.

With the support of NorthEdge, Arthouse is now looking to further strengthen its presence in the UK and expand into overseas markets, in particular the US and Middle East. It is also aiming to enhance its digital offering and make further bolt-on acquisitions, with a focus on other companies in the UK targeting overseas markets.

NorthEdge director Jon Pickering led the deal alongside partner Ray Stenton, investment manager Phil Frame, and investment executive Harry Jones. Pickering and Jones will join the board as non-executive directors.

Arthouse managing director Kenyon said: “NorthEdge’s investment marks the next stage of development for Arthouse.

“We have worked closely with the team at Total Capital Partners for eight years since taking the business independent.

“Their innovative investment structure was ideally suited to support our growth plans, with the result that we have diversified to become one of the country’s leading suppliers of interior decor solutions.

“We are now in a strong position to embark on the next stage of our development and NorthEdge’s funding will enable us to further upscale our service offering and target overseas expansion, allowing Arthouse to reach an even wider range of customers both at home and abroad.

Pickering added: “Securing the investment in Arthouse demonstrates the skills of the team at NorthEdge in originating off-market private equity transactions and also delivering wider funding opportunities for entrepreneurial businesses across the North of England.

“We have also been able to make use of our extensive local adviser network who worked alongside us to support us on this transaction.”

Jonathan Boyers and Alex Hartley at KPMG and Helen Ridge at Pinsent Masons advised Total Capital Partners.

Boyers, head of corporate finance in the North at KPMG said: “Arthouse is a fantastic example of an innovative local business which has gone from strength to strength under an entrepreneurial management team. With consumer confidence on the increase and the housing market showing little sign of cooling, the outlook for the home improvement sector is looking positive once more.

“This investment from NorthEdge will therefore allow Arthouse to capitalise on this renewed confidence, putting its ambitious growth plans into motion and expanding into new markets overseas.”
 
Paul Kaiser at UNW and Katherine Hay-Heddle advised Arthouse and  NorthEdge was advised by Jonathan Robinson and Vicky Ross at DWF, Matt Copley and Bob McDermott of BDO did financial due diligence and Simon Bones of Credo Business Consulting undertook commercial due diligence.