Key Capital Partners eyes Yorkshire deals

The private equity firm launched in 2007, with backing from institutional investors including West Yorkshire Pension Fund.

As it continues to raise funds, Leeds-based investment partner Peter Armitage said the firm remains committed to its strategy of investing in small and medium-sized enterprises (SMEs) that are poised for growth.

Key Capital Partners serves the “huge gap” that opened up in the smaller buyout market - between £1m and £10m - and plans to “stay in that space”, Mr Armitage said.

“We’re probably going to move the cheque size up to about £15m, as we do see a lot of opportunities in that space,” he said. “But we decided our strategy and took it to our investor base and that’s what we’re going to do.”

The company, which has made 15 investments since its launch, is currently looking at two upcoming Yorkshire-based investments, with “more across the North”, Mr Armitage said.

Key Capital Partners’ network of offices, in Leeds, Birmingham and London, gives the firm an advantage over its London-based peers, who often won’t see a regional deal “until its been turned down by everyone in the regions”.

It has already seen success through its deals with Hallam Medical, a recruitment business based in Sheffield, and York-based musical instrument etailer Gear4Music.

Since investing in Hallam Medical in April, the £13.5m turnover recruiter, which specialises in providing nurses to primary care settings, is expected to achieve £20m revenue in the current financial year.

It is also on track to grow its workforce by 50 per cent, from 40 to 60.

Mr Armitage said the Hallam Medical team is “very ambitious”.

“It’s in a very exciting area, providing temporary nurses into the primary healthcare market,” he said. “It’s a specialist in that area and it’s a growing sector.”

The money invested in Gear4Music has been used to rollout its UK-based online store throughout Europe. It now hosts 18 country-specific websites across 12 languages.

The business, which had £10m turnover in 2012, is projected to have £23m revenue in 2014/2015, and £33m next year.

While the businesses stretch across a wide-array of sectors, they are grappling with similar challenges when Key Capital Partners invest.

He said: “They’ve all got the same issues: how to grow and how to manage a growing business.”

“We’ve been doing this since 1985, there’s not much we haven’t seen,” he added.