Private equity group hit after timber company collapse

RETURNS at new private equity house Spirit Capital could take a hit after the failure of the timber products group Palgrave Brown.

Spirit launched in September following the management buyout of Aberdeen Asset Management’s private equity business.

It took on Aberdeen’s portfolio of investments including a majority stake in Palgrave Brown which failed this week with debts of around £40m. Receivers are hoping to find a buyer for the business.

Aberdeen backed a £30.6m secondary buyout at the Chorley-based business, led by Keith Rutherford and Neil Ward, in 2002. Barclays provided the debt.

Spirit, which works across the UK from offices in Leeds and London, has been looking for an exit – either through a sale or refinancing – but the slump in the construction industry means related businesses are out of favour.

Palgrave, which employs nearly 500 staff, specialises in roof trusses and supplies all the major housebuilders.

The £62.9m turnover business saw sales crash by up to 50% after orders started to dry up six months ago.

Receivers were appointed on Tuesday but its directors called in restructuring experts months ago.

Spirit declined to discuss the company, saying the business was now in the hands of receivers at BDO Stoy Hayward.

Joint administrative receiver Dermot Power said: “We’re in negotiations with three or four potential buyers who are all keen. We’re very hopeful we can sell most of it and protect most of the jobs some time over the next few weeks.”

Palgrave Brown is one of the largest businesses in its field and has a national network of 17 offices. BDO was appointed to both Palgrave Brown (UK) Ltd and its parent Palgrave Brown (Holdings) on Tuesday.

Spirit Capital focuses on the lower mid-market, investing £5m-£20m.