Private equity house LDC has picked out the food and drink sector as a key area for investment after pledging £1.2bn of capital over three years to help accelerate growth among the UK’s mid-sized companies.
The firm, which counts Ministry of Cake, The ComplEAT Food Group and Intercontinental Brands among its 90-strong portfolio, said its plans were designed to help more management teams access the capital needed to achieve scale at home and abroad.
“Food and drink production is a key sector focus for us,” said Alistair Pendleton, a director at LDC who led its investment in Ministry of Cake, which manufacturers cakes and puddings for the foodservice industry.
“There are hundreds of entrepreneurial small and mid-sized companies operating in the sector with high-quality products and ambitious management teams. With the right investment partner, there is a clear opportunity to build scale organically and by acquisition, particularly in export markets.
“M&A activity has always been a strong feature of the sector but we expect this to accelerate as more manufacturers look to consolidate to drive growth.”
Over the past three years, LDC invested £930m in more than 50 businesses, as well as providing follow-on capital to support acquisitions in the UK and overseas. Since it was founded in 1981, it has backed over 425 firms, including household names such as premium tonic and mixer brand Fever-Tree, which it exited last year following last year’s successful floatation on AIM.
LDC added the new £1.2bn for mid-sized companies would be balanced across the UK regions and core sectors.
“Mid-sized businesses are vital to the UK economy, and our core aim is we want to help them grow more quickly,” joint CEO Chris Hurley said. “Private equity investment is a powerful catalyst.
“Not only does it provide the capital to fund investment, it brings the market-leading strategic and operational expertise of our teams and non-executive network to help management teams overcome the barriers to growth and unlock the business’ potential.”
LDC invests between £2m and £100m in UK-based companies.