3i and LDC sell MKM to Bain Capital

The transaction values the business at around £200m, according to a report by the Financial Times.

The divestment comes more than 18 years after 3i first invested in the business and more than 10 years after it took part in a £21m growth capital investment alongside LDC.

The exit will generate around £70m for 3i, which, combined with £11m from previous proceeds, represents a 5.9x money multiple for the GP.

Under the tenure of LDC and 3i, MKM has undertaken a nationwide growth strategy, trebling its revenues since 2006, according to a statement issued by the vendor. The business has increased its number of branches from 19 to 47 and grown its headcount from 450 to 1,100 during 3i's and LDC's combined 10-year tenure.

The company will continue to focus on UK expansion under its new owners.

Bain has previously invested in the UK building materials sector, acquiring Ibstock (then the clay and concrete divisions of listed brick maker CRH) for £414m in December 2014.

MKM's management team, led by founder and executive chairperson David Kilburn, will retain a significant stake in the business following the deal.

The transaction is expected to complete by May 2017, following the issuance of regulatory approval.

Previous funding
3i first invested £2m in growth capital in MKM in July 1998.

In March 2006, the GP led a second funding round of £21m, which was partially syndicated to LDC. Following the deal, 3i owned a significant minority stake in the business, according to unquote" data.

Company
Founded in 1995, Hull-headquartered MKM is a builders' merchant. The company generates a turnover of £284m, according to a statement issued by the vendors, up from £82m in 2006.

People
3i – Jonathan Crane (director).
Bain Capital Private Equity – Matthias Boyer Chammard (principal).
MKM Building Supplies – David Kilburn (founder, executive chairperson).

Advisers
Vendor – Rothschild (corporate finance); Addleshaw Goddard (legal); PwC (other due diligence); OC&C (other due diligence).
Equity – Moelis & Company (corporate finance); PwC (financial due diligence); Ropes & Gray (legal).

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