Few of us will ever look back on another year like 2020. The pandemic has created a unique set of challenges for us all professionally and personally. Some faced adversity, others found opportunity, and everyone felt uncertainty.
But an important characteristic in the management teams we have partnered with over the last 40 years is that of ambition. And last year showed just how resilient ambition can be.
Despite that uncertainty, many of the business leaders we back achieved exceptional results by responding swiftly – investing in new opportunities or pivoting their proposition. Others stabilised quickly by acting decisively to conserve capital, putting themselves in the best position possible to rebuild and recover.
For our part, we’ve focused on supporting our portfolio companies with important capital and counsel to help them achieve their goals.
We have maintained our commitment to invest in new companies – from commercial vehicle accessories maker Rhino Products to e-commerce fulfilment provider James and James, pensions support specialist Ross Trustees and cloud-based technology experts Kerv. In total, we deployed £240m in new investments to support 14 management teams in 2020.
We’ve also helped portfolio companies by providing follow-on funding to expand through acquisition, building resilience and scale along the way.
We have supported 35 bolt-ons in 2020 alone – from telecoms group Onecom making two acquisitions in the last six months, to residential lettings firm Linley & Simpson marking its 18th under LDC’s stewardship, and MSQ Partners completing the public-to-private acquisition of the Be Heard Partnership.
We have continued to source strategic buyers for some of our ambitious portfolio where we’ve helped management teams build significant value, including the sale of chilled savoury pastry manufacturer Addo Food Group to PAI Partners, global education technology business Texthelp to Five Arrows and Panther Logistics to US-based AIT Worldwide Logistics.
On average, the 17 businesses we exited in 2020 grew revenues and profits by more than 2x during an average partnership length of 4.4 years.
Working in partnership with portfolio management teams, we have generated £875m in proceeds with an average money multiple of 3.6x and IRR of 57 per cent.
In my three years on the board of LDC, I’ve seen first-hand its success as one of the most respected and consistently high-performing private equity firms in the UK – a strong platform for any incoming CEO.
We understand how vital it is to keep supporting business during tough times, not just when the economy is booming.
LDC has been backing ambitious business leaders for 40 years, so our teams have been through ups and downs before. At times like these, experience and flexibility are what count.”
And, so the road ahead.
2021 is likely to continue to be challenging with the impact of the pandemic, the implications of Brexit, a global climate change emergency and the need to ensure the recovery doesn’t leave places or people behind.
We have an important role to play at a critical time for the economy. Through our investment activity and portfolio support, we have the ability to positively influence the environmental, social and governance contribution of the businesses we back, which is a responsibility we take seriously.
Meanwhile our regional approach can play an important role in supporting the nationwide levelling-up agenda.
As we enter our 40th year in business and reflect on the positive impact we’ve had, it’s equally important to consider how we can drive positive change over the next 40 years, and what ambition we set ourselves as a leading UK investor.
We remain as committed as we have ever been to support the ambitions of management teams leading growing mid-market businesses with £1.2bn to invest in the next three years.
After all, if the absence of ambition is to admit defeat – then its presence is to believe success can always be achieved.
So, from all of us at LDC, here’s to a future filled with ambition.
TOBY ROUGIER, CHIEF EXECUTIVE, LDC