Palatine pays £16m for LDC's Forrest

Alice Murray
14 October 2013

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Palatine Private Equity has backed the ТЃ16m secondary management buyout of social housing contractor Forrest, generating a 2.4x return for vendor LDC.

However, the transaction is not a final exit for LDC, with both GPs now holding a combined majority stake in the business.

The deal was supported by £26m of senior debt and working capital facilities provided by RBS and Santander Structured Finance.

Previous investment
LDC first backed the company in July 2007, in a deal financed by RBS. Over the holding period, Forrest's revenues have grown from £38m to more than £100m.

Company
Bolton-based Forrest provides refurbishment and maintenance services to the social housing market in the North of England. It also carries out new-build development and estate-renewal services within the social housing market.

The company has recently developed a renewables offering and is a registered installer under the government's Green Deal and Energy Company Obligation (ECO) initiatives.

Social housing clients include Bolton at Home, City West Housing Trust, Salix Homes and Blackpool Coastal Homes.

Forrest employs 500 people and operates a further maintenance division site in Leeds.

People
Lee McCarren is CEO of Forrest and Mark Lyons is managing director. The company's current chairman Robert Morgan will leave the business following the deal. Palatine managing partner Gary Tipper and partner Ed Fazakerly will join the company's board. Palatine investment manager James Winterbottom also worked on the deal.

Jonathan Bell, director and co-head of LDC in the north-west, led the investment for LDC and will remain on the company's board following the transaction. The RBS team was led by Tony Dean and James Adam, while the Santander team comprised Chris Thomas and Paul Wickers.

Advisers
Management – Deloitte, Paul Trickett, Jodi Birkett (Financial due diligence); DWF, Jonathan Robinson, Darren Ormsby (Legal).
Equity – Gateley, Rebecca Grisewood (Legal); Quinn Partnership (Management due diligence); Marsh (Insurance due diligence).
Debt – Addelshaw Goddard, Richard Oman (Legal).