Private equity takes majority stake in JLA

A PRIVATE equity firm has taken a majority stake in Yorkshire-based JLA, the UK's largest commercial laundry equipment supplier.

The deal is believed to value the family-owned firm at around 150m. HG Capital issued a short statement yesterday confirming the investment.

Matthew Rourke, partner and head of the business services team at HG Capital, said: "JLA is a market-leading business with significant growth opportunities and we are delighted to support the company in the next stage of its development."

John Laithwaite founded the business in 1973. The 65-year-old is understood to be keeping an interest in the company.

He was unavailable for comment yesterday.

The HG Capital statement said: "JLA has evolved to become one of the most innovative companies in the worldwide laundry industry.

"It designs, installs, maintains and repairs laundry equipment used by over 18,000 customers who either buy the equipment outright or rent it from JLA.

"It has also developed proprietary technology systems to help its clients operate safer and more energy efficient laundries."

JLA has developed a strong reputation for new product development in its market.

Developments include sensor-activated fire extinguishing system dryers, introduced in 2002, with built-in extinguishers to combat spontaneous combustion in dryer drums.

In 2004 JLA launched the 3m Otex laundry system, which reduces energy costs and kills bacteria, viruses and superbugs such as MRSA and Clostridium difficile on all wash cycles.

In the last year, JLA launched a new energy intelligence product to reduce consumption costs in heating systems by up to 30 per cent.

The company, which has 340 employees and is based in Ripponden, sells to customers including care homes, hospital trusts, hotels, housing schemes, military bases and prisons across the UK and has offices in Scotland and Ireland.

It provides maintenance and repair back-up from a national service centre.

JLA generated earnings before interest, tax, depreciation and amortisation of about 16m in 2009 but valuing the business proved difficult as it had large depreciation and interest charge figures, according to Reuters.

In 2008, the managing director Stuart Wilkinson told the Yorkshire Post: "The credit crunch doesn't seem to be affecting us. We are not despondent about the marketplace because laundry is a necessity and relatively recession-proof.

"I suppose someone could make the decision to repair rather than replace a washing-machine, but we are looking at growth."

He added: "We can only be as good as the people within the business, and we are constantly investing in staff."

Mr Wilkinson attributed JLA's success to its willingness to invest heavily in the research and development of ground-breaking new products and its commitment to high quality repair and maintenance ser- vice.

The sale was handled by Cavendish, a London-based corporate finance adviser.

HG Capital, the investor, specialises in the European mid-market on sector-focused deals with an enterprise value of between 50m and 500m.

The firm manages 3bn for some of the world's leading institutional and private investors.

It manages the investment portfolio of the listed HgCapital Trust, which provided 12.1m of the total consideration in the JLA deal.

A spokeswoman for HG Capital declined to confirm any details about the size of the transaction.

An upsurge in activity

HG Capital investment in JLA represents the second major deal in a busy week of activity for the region's deal market.

On Tuesday, the Yorkshire Post revealed that Phoenix Equity Partners had taken a majority stake in family-owned Andrew Page, the Leeds-based distributor of vehicle components, in a deal which valued the family-owned firm at 100m.

The Andrew Page deal was funded and advised entirely from Yorkshire, unlike the JLA transaction, which largely involved London-based advisers.

Market watchers expect a bit more activity in the coming weeks, but dealmaking is likely to fall off after the General Election due to economic uncertainty.