YFM profits from Hargreaves IPO

Guy
21 December 2005

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Shares in Hargreaves Services Plc which floated on AIM earlier this month are now trading at an 20% premium to the 243p per share issue price. The company, a leading provider of bulk materials, principally coal, and support services to the energy and waste sector, has a particularly strong profile in the Yorkshire and Humber region.

In April 2004 Leeds based YFM Private Equity invested £3.5m of Baring English Growth Fund monies in a management buy-out at Hargreaves. Over the last 20 months the company’s new owner-managers have reorganised the business and driven a rapid expansion of the business through organic growth and bolt-on acquisitions. One of the more recent acquisitions was the Monckton Coke Works in South Yorkshire.

The success of the Hargreaves IPO, which was substantially oversubscribed, has given the company the financial muscle it was looking for to continue its expansion programme. Whilst the Baring English Growth Fund had an opportunity to sell its share stake in the business at the IPO it has retained an equity stake currently worth £5.1m.

At the current share price institutional investors in the Baring English Growth Fund are seeing a 3.3x multiple on their original investment, equivalent to a 111% IRR.

Hargreaves was founded in 1994 as a coal haulage business with approximately 20 vehicles. The company’s activities have grown to include coal importing, mineral trading, coke production, waste handling and transportation, handling and processing of minerals through its own port facilities at Immingham on the East coast and Newport on the West coast and specialist bulk haulage.