RCapital acquires Havelock from administrators

A statement issued by the acquirer stated that the deal would safeguard 300 jobs and the company's manufacturing sites.

Financial details of the deal remain undisclosed, though RCapital typically invests £200,000-20m in businesses with turnovers of £5-200m.

The company's shares were suspended from trading on AIM last month due to concerns surrounding its financial position, with Havelock itself saying at the time that its financial results "may cast significant doubt over its ability to continue". However, in its annual report published weeks earlier, the business said the first four months of 2018 EBITDA were "well ahead of prior year and tracking closely to expectations".

Havelock generated a turnover of £53.2m in the year ending in September 2017, a 13% year-on-year reduction, with a loss before taxes of £5.3m, according to publicly available documents. The company's financial results stated that it "continues to carry forward substantial losses and does not expect to be in a tax-paying position for some time".

The business also said that cost reduction has increased as a focus for retail clients, putting pressure on its margins, and its procurement and manufacturing costs. The UK retail sector has come under severe pressure in recent months, which has regularly been attributed to post-Brexit-vote devaluation in sterling, an increase in business rates and the introduction of the national living wage.

Havelock has committed to fulfilling its existing projects and will undertake a restructuring process upon completion of the deal.

A number of PE-backed businesses have become casualties in the wider high-street downturn. At the end of February, Rutland Partners-backed electronics retailer Maplin Electronics entered into administration and Endless announced the divestment of footwear retailer Jones the Bootmaker to Pavers with a concession that the fortunes of the business "could not be turned around" due to adverse retail conditions.

This was followed by Brait Private Equity-backed clothing and accessories retailer New Look pursuing a CVA in March and Emeram Capital Partners-backed UK fashion retailer Bench entering into administration in May.

On the turnaround front, Hilco Equity Partners acquired DIY retail business Homebase from trade vendor Wesfarmers in May. At the time, the vendor, which acquired Homebase in 2016, said the brand had suffered from "poor execution post-acquisition" in addition to the deterioration in the macroeconomic environment and retail sector in the UK.

Company
Founded in 1963, Kirkcaldy-headquartered Havelock produces furniture and fittings for shops and public buildings. Its clients include Marks & Spencer, Primark, CarStore and Lloyds Banking Group.

People
RCapital – Josie Richardson (director).
Havelock Europa – Shaun Ormrod (CEO).

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