Palatine acquires housing provider Jessup

The GP will hold a majority stake in the business, with founder Clive Jessup retaining a minority stake.

Richard Thomas, a partner at Palatine, told Unquote the sponsor invested just under GBP 16m on the deal.

Thomas said the firm participated in an auction process managed by Clearwater. The sale process was not broad and other participants included financial investors.

"We got exclusivity early on; we worked with the founder, Clive Jessup, and his team to build out a strategic growth plan while doing the deal." He explained that there was some cash-out to the founder but Jessup retained an undisclosed significant minority stake in the business and will stay on as founder-director.

The investment will allow Jessup to expand into the East Midlands as well as continue to develop its existing operations in the West Midlands. Thomas said in a statement Palatine's backing enables Jessup to support more local authorities and registered providers in housing crisis challenges. He told Unquote that there is a strong demand for housing in the East Midlands. Although there are no immediate M&A plans for the company, deals could be considered as the business expands organically if the right opportunity comes along. Moreover, he added, the GP will further enhance the company's ESG strategy to ensure that it is sustainable for the future and part of that is developing a modern method of construction.

Thomas and investment director Tom Hustler join the Jessup board as non-executive directors. The deal also sees members of homebuilder Westleigh, a former Palatine portfolio company, join Jessup's leadership team, including its founder, Chris Beighton, who joins as chairman; director Matt Moore, joining as CEO; CFO Kathryn Facey, joining as a non-executive director.

Thomas told Unquote that the Palatine intends to strengthen the leadership team further by adding executives it knows in the market to further grow the business.

Palatine invested through Palatine Private Equity Fund IV which held a final close on GBP 220m in May 2021. The fund was announced in August 2019 with a GBP 250m target, according to Unquote Data.

Similar investments in the housing space made by Palatine include the 2016 investment in Westleigh, which was sold in April 2018 to Countryside PLC. Palatine said the exit generated 3x money multiple, according to Unquote Data.

Palatine Fund IV seeks to make around 10-12 platform investments and is around 30-50% invested to date, said Thomas. It deploys equity tickets in the range of GBP 10m- GBP 30m, targeting UK-based businesses focussing on B2B investments including in sectors such as financial services, TMT, healthcare, and business services, according to Unquote Data.

Thomas said the GP has no exit plans for portfolio companies in the fund at the moment as a number of them are in growth and M&A mode. According to him, the sponsor expects to make another three to four deals this year.

Company
Jessup is based in Staffordshire and was established in 1988. It operates in the Midlands and provides residential and commercial properties with a full development management service, which includes construction of high-quality residential stock and land acquisition and planning consent.

According to a press release, Jessup currently delivers approximately 500 homes per year and has diversified into mixed-use development for customers including the YMCA. The company has 92 employees.

Accounts show the business posted a 2021 turnover of GBP 56.2m and GBP 55.8m in 2020. Thomas said the company expects a turnover of GBP 55m in 2022.

People
Palatine - Richard Thomas (partner, head of Palatine's Midlands office).
Jessup - Chris Beighton (chairman); Clive Jessup (founder).

Advisers
Equity - Alantra (corporate finance); Browne Jacobson (legal); RSM (financial due diligence) and CIL (commercial due diligence).
Vendor - Clearwater (corporate finance); Gateley (legal).

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• Topics
• Buyouts
• UK / Ireland
• Industrials
• United Kingdom
• Palatine Private Equity