NorthEdge acquires mattress maker DHS

Kenny Wastell
21 April 2016

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NorthEdge Capital has acquired a majority stake in Direct Healthcare Services (DHS), a British manufacturer of mattresses, pillows and beds for the healthcare sector.

The management buyout marks the GP's first investment in the healthcare sector.

Upon completion of the deal, the business will undertake an acquisitive growth strategy and look to expand internationally. It will also ramp up its headcount and invest in product development.

Financial details of the DHS transaction were not revealed. NorthEdge typically makes investments of between £5-35m, though unquote" understands the deal valued the business at an eight-figure sum.

Capital for the investment was drawn from NorthEdge's first fund, a £225m vehicle that held its final close in March 2013. The GP also closed its second fund on £300m in March this year.

NorthEdge stated it was introduced to the deal by US healthcare-focused venture capital firm BBCH Capital.

NorthEdge chairperson Michael Joseph will take a seat on the DHS board alongside the firm's newly promoted investment manager George Potts.

Company
Founded in 2009 and headquartered in Caerphilly, near Cardiff, DHS produces mattresses, pillows and beds that reduce the risks of pressure-related ailments in healthcare patients. It employs 80 people and exports to 20 countries.

DHS generated a turnover of £8.8m in the year to March 2015 with profits of £1.1m, a year-on-year increase from £6.6m and £700,000 respectively.

People
DHS – Graham Ewart (CEO); Stuart McAllister (European sales director); Gerry Boyle (operations director); Dermot Patterson (Asia Pacific sales director).
NorthEdge – Ray Stenton (partner and head of new business); Jon Pickering (director); George Potts (investment manager).

Advisers
Equity – Clearwater International, Mike Reeves, John Clarke, Ramesh Jassal, James Kennedy (corporate finance); Addleshaw Goddard, Paul Medlicott, Oliver Hincks, Ed Hamilton; Helena Drury (legal); CIL, Giles Johnson, James Silk (commercial due diligence); BDO, Chris Heatlie, Thomas Smith (financial due diligence, tax); Manufacturing Institute, Peter Sussex, Jim Dowell (operational due diligence); KPMG, Andrew Caulton, Steve Heath (IT due diligence, tax); Diagnostic Capital, Alex Clarkson (commercial due diligence); Marsh, Kim Fitzpatrick (insurance due diligence); Blackwood, Mike Rugg-Gunn (management due diligence).