Private equity player Exponent has sold a “significant” stake in ingredients specialist Meadow Foods to investment group Fairfax Financial.

Exponent, which invested in the then-dairy specialist in 2018, and the founding Chantler family will both retain shareholdings in Meadow.

However, it is understood Canada-based Fairfax, a holding company that operates primarily in property and casualty insurance and reinsurance, has taken a majority stake as a result of the deal.

Meadow is now a multi-category ingredients specialist across the dairy, confectionery and plant-based industries, having expanded the breadth of its business under Exponent.

Key milestones in recent years include entering the plant-based category through the construction of a segregated plant-based dairy facility in Chester, and entering the inclusions and sweet sauces categories through the acquisitions of Nimbus Foods and Naked Foods, the latter earlier this month.

“We are proud of the strong growth achieved since partnering with Exponent, and I’m delighted that Meadow has seen interest from a solid financial institution like Fairfax,” said Raj Tugnait, CEO at Meadow.

“The alignment of Fairfax’s culture and values and our shared vision for growth and innovation resonated with me personally. It is business as usual for our customers and Fairfax is the ideal long-term partner for Meadow’s journey ahead.”

Exponent partner Mark Taylor added: “When we invested in Meadow, we recognised the opportunity to support the business in its transformation from a commodity dairy player to a diversified speciality food ingredients supplier, building on our experience in the sector with the likes of Quorn Foods and Loch Lomond.

“Over the course of our partnership, the business has generated significant organic and inorganic growth, including four bolt-on acquisitions, and accelerated its shift into more value-added ingredients. It is a trusted partner to the world’s largest food and beverage companies. We are delighted to have played a key role in Meadow’s successful journey to date, and we wish the team well as the business prepares for its next phase of growth.”

In its most recently filed accounts for the year to 31 March 2022, the business generated sales of £450m – up 16.4% year on year – and adjusted EBITDA of £26.9m.

Meadow now employs over 500 people across five BRC accredited sites in Chester, Peterborough, Holme-on-Spalding-Moor, Dolgellau and Headcorn.

The group has also focused its efforts on becoming a market leader for sustainability in the dairy industry, partnering with farmers to reduce the carbon footprint of its raw materials inputs, targeting net zero operational sites by 2030 and to be fully net zero by 2050.

These efforts have resulted in a 21% reduction in CO2e emissions per kilo of milk since 2018, with its suppliers are now producing milk which is 63% less carbon-intensive than the global average and 15% less carbon-intensive than the UK average.