Equistone looking North to invest in firms

The group closed the Equistone Partners Europe Fund IV on Friday, after winning the backing of 42 institutional investors including pension funds, sovereign wealth funds and insurance companies.

It is Equistone’s first independent fundraising since it was spun out of Barclays at the end of 2011.

Equistone and its predecessor Barclays Private Equity has long been an investor in Yorkshire, and owns a majority stake in Leeds-based glass container maker Allied Glass.

It also has a stake in Wakefield’s AFI Uplift, which supplies powered access machines, after backing the merger of AFI Aerial Platforms and Uplift Platforms.

“We expect to be making transactions in the north during 2013,” said Steve O’Hare, head of Equistone Partners Europe in the north.

“We have made significant investments into northern businesses across a number of sectors with the common theme of backing strong management teams.”

Equistone has invested more than £290m in northern businesses over the past six years.

It invested £40m in a management buyout of Leeds-based fleet hire firm Zenith Vehicle Contracts in 2007. Equistone sold its stake in Zenith to Morgan Stanley in 2010. Its latest fund will invest across Europe and is targeting a range of sectors.

Mr O’Hare, who splits his time between Equistone’s Manchester office and Yorkshire, said the firm has forged “strong relationships” with growth companies across Yorkshire.

“There’s still an active deal market,” he said. “People are still willing to buy and sell companies.

“It’s not as active as it was pre-credit crunch, but we’re all used to the new world. It’s not going to get materially better from an economic and banking perspective, therefore we just get on with it.”

As Barclays Private Equity it backed northern discount retailer The Original Factory Shop in 2004. The company was sold in 2007 to Duke Street Capital in a £68.5m secondary management buyout.

In 2010 it also sold its remaining 12.6 per cent stake in estate agency chain LSL Property Services, after backing a management buyout in 2004.

Mr O’Hare declined to disclose the returns promised to investors, or over what duration it plans to invest the 1.5bn euro fund.

“There’s no way you would raise any money in what is the most difficult fundraising market anyone can remember if investors were not satisfied with our track record,” he said.

“We believe that we’ve got a differentiator against other private equity firms, which means that our returns have been higher.”

He said while there may be general concerns about the state of Europe’s economy, “we keep achieving very good returns”.

“As in any industry there’s always going to be a flight to quality,” said Mr O’Hare. “Good quality businesses will get the support of either trade buyers, an IPO (initial public offering) or private equity.

“What’s not happening is a few years pre-credit crunch, average businesses were being sold for more than they were worth.

“Good money was chasing either average businesses or bad (businesses). The average ones are not being sold for that sort of money. That was the more false market at the time.”

Equistone has 33 investment professionals, who work alongside company management teams. “We have the same investment criteria for every opportunity that’s put forward, whether in Leeds or Munich,” said Mr O’Hare.

“The key for us is spotting really good quality management teams that have developed a differentiated proposition across a market place.”

The fund will continue to invest in buyouts valued at 50m-300m euros.

Guillaume Jacqueau, managing partner of Equistone, said: “This achievement is testament to the team’s successful investment track record in identifying and partnering with strong management teams to achieve impressive returns for our investors and long-term growth.”

[email protected]