Investments

Realisations

Investments

Pinewood Structures Limited
Matrix has financed the £14 million management buy out of Pinewood Structures, the leading UK manufacturer of timber frame components. Matrix has acquired a significant stake for a £4.4 million investment in the business and was supported by senior debt and working capital from Bank of Ireland.
Pinewood has a well established position in the UK housing market supported by longstanding partnerships with the main house builders, including Wimpey/Laing, Persimmon and Bellway. The timber frame housing market is showing attractive growth, fuelled in part by Government support for lower cost, energy efficient, affordable housing.
Headquartered in Cambridgeshire, Pinewood was established in 1981 and has become one of the UK’s largest manufacturers of timber frame structures. Matrix anticipates Pinewood Managing Director, Geoff Arnold, capitalising on the company’s strong presence in Southern England by expanding organically and through acquisitions in other regions. Pinewood employs 170 people and has annual revenue of £23 million.
Matrix was particularly attracted for two reasons. The business is a highly experienced supply chain manager in this segment of the UK construction market. Matrix believes that sophisticated UK producers of bulky products with efficient assembly and flexible call off facilities will continue to enjoy competitive advantage over overseas manufacturers. The sector is also undergoing change with recent acquisitions and new entrants. Pinewood is ideally placed to be a consolidator in this market. Jonathan Gregory led the deal for Matrix with support from Eric Tung and Bob Henry.

British International Limited
Matrix has financed the £20 million secondary management buyout of British International Limited (“BIL”) the company that runs the Penzance to Isles of Scilly helicopter service. Matrix has led a syndicate comprising Finance Cornwall and Chrysalis VCT that has invested £5 million equity, with senior debt and asset finance provided by Bank of Scotland Corporate.
BIL is one of the UK’s leading suppliers of helicopter services and has a number of important public service contracts. It operates the UK’s only scheduled service by helicopter, with flights between Penzance, Cornwall and the Scilly Isles. The service carries 130,000 passengers a year with up to 26 flights a day during peak season. BIL has long-standing relationships with the Ministry of Defence; providing helicopter support to the FalklandIsland garrison and Flag Officer Sea Training and Joint Maritime Courses in Plymouth and off the west coast of Scotland.Other important services include the provision of an Air Support Unit to the joint police forces of South Wales and Gwent, and to QinetiQ for the retrieval of targets used in training RAF pilots off the coast of West Wales, and supporting Shell off the Donegal coast.
BIL was formed in 2000 following a 3i backed Management Buy In of the non-oil related operations of Scotia Helicopters and Canadian Helicopter Corporation. The MBO teamconsists of David Hayler, Peter Sorby and Tony Jones. They are joined by new non-executive Chairman, Peter Shawyer, who is a former Managing Partner of Deloittes in the UK. Mike Walker, Portfolio Director at Matrix also joins the Board as a non-executive director.
BIL is a profitable group with annual revenue of £19 million and operates from five different UK locations at Penzance, Plymouth, Cardiff, Bournemouth, Sherborne, Ireland and the Falkland Islands. It employs 160 staff.
Jonathan Gregory, Director of Matrix, said: “We were attracted to BIL because of the long term contracts for a substantial proportion of the business’ income, and the opportunity to expand by entering the offshore oil industry.”
The management team of BIL, said: “We feel that with the backing of Matrix, Chrysalis and Finance Cornwall, British International will be able to continue to strengthen its position within its core markets and undertake further expansion into new areas of business in the knowledge that we have firm backing from a group of innovative investors.”
Mark Wignall, Chief Executive of Matrix said, “ We are delighted to be supporting an important transport link for South West England and also to be completing our sixth MBO so far this year.”
Robert Seymour, managing director of Finance Cornwall, said: “BIL provides essential services to the Isles of Scilly and is a significant employer in West Cornwall. As the only Cornwall-based provider of equity finance we are delighted to be involved in such a significant deal and we wish the team all the best for the future.”

Pasta King Limited
Matrix Private Equity Partners has financed the MBO of Pasta King alongside management and HSBC (Exeter) who provided the senior debt and invoice discounting facility.
Pasta King provides a healthy, pasta-based quick service meal alternative to businesses and to the education sector. Customers include Compass, IKEA, Sodexho and numerous Universities including Edinburgh, Aberdeen and Exeter.
The company has seen rapid growth over the past two years through providing high quality but cost-effective Pasta Bars to the catering operations of its customers that enable swift preparation and service of fresh pasta meals of a consistent quality at the point of sale with minimal staff.
The business is based in Newton Abbot, Devon and employs 40 people. Annual turnover is £6 million. The management team is led by Sue Davenport, Managing Director, and Paul Haigney, Production Director. Ashley Levinson, partner at Bishop Fleming, has also invested and joined the Board as Chairman.
According to Sue Davenport: “At a time when our core market - schools and colleges - has become focused on the importance and value of healthy meals, Pasta King’s commitment to quality food is ideally placed to meet that demand. We were thrilled to have recently worked alongside Jamie Oliver and the Feed Me Better campaign, on a pilot program for schools.
”Bob Henry, Director at Matrix, said: “Pasta King has an enviable position in the UK catering market with excellent customers who have an increasing requirement for healthy food at an affordable price. The timing for the buy out could not be better.
”Katia Frank, Associate Director at Matrix, added: “We targeted the food industry as an attractive investment area last year and it’s pleasing to have completed our third recent MBO in this sector.”

Blaze Neon Limited
In May 2006 Matrix financed a £5 million secondary management buyout of Blaze alongside management and senior debt from Lloyds TSB.Blaze is a leading player in the design, manufacture and installation of shop front and internal signage for major multiple retailers.It specialises in the fast turnaround re-branding of multiple units in the UK.It has a significant market share with its customer base comprising high street multiple and out of town retailers including Tesco, Royal Bank of Scotland, Abbey, Co-op, Argos and DFS. Blaze has an underlying level of business from servicing its existing customer base that is supplemented by large projects, usually involving a major rebranding exercise across a retailer’s entire estate.The MBO team was led by Clive Knight, Managing Director, Chris Abbott, Sales Director and Joanna Boraston, Finance Director.Blaze, founded in 1981, was the subject of a management buy out in 2000 backed by Dunedin and RBS. The business, which is based in Broadstairs, Kent and in Birmingham is profitable and has turnover of c. £12 million. It employs a total of 200 people. Jonathan Gregory, Director at Matrix, said: “We were attracted to Blaze because of its leading position in a market that has real barriers to entry. Furthermore, the existing team has considerable experience and is driven to build on the company’s strong position.”

VSI Limited
In April 2006, VSI Limited, a group specialising in developing and marketing 3D software, has been sold by its founder shareholders to the management team in a £6 million Management Buy Out. Matrix Private Equity Partners invested £1.9 million with the remaining funds comprising cash and roll-over from management and senior debt from HSBC bank.VSI comprises two companies, LightWorks and MachineWorks, and was originally founded in 1989.LightWorks is a leading supplier of advanced rendering solutions for the engineering and architectural Computer Aided Design (CAD) sectors. MachineWorks develops industry standard component software that provides functionality to simulate and verify machining operations for the Computer Aided Manufacturing (CAM) software market. Both companies are global leaders in their respective market niches, and have long standing relationships supplying blue chip CAD and CAM vendors around the world.
The MBO team is led by David Forrester, the Group MD and FD, the MD of LightWorks, Andrew Chapman and the MD of MachineWorks, David Manley. VSI is based in Sheffield and has turnover of c. £4 million. The group employs a total of 48 people.

Campden Publishing
In January 2006 Matrix completed the £6 million MBO of Campden Publishing Limited, a leading advertising-funded B2B publishing and events business operating in the healthcare and private wealth management markets. Matrix invested £2.5 million of the £4 million equity, with the balance of the transaction having been funded by management roll-over and cash investment.
The MBO team was led by Managing Director, John Pettifor. Privately owned Campden operates in two attractive niche markets that each has distinct growth drivers and defensive characteristics. In Healthcare, Campden has capitalised not simply on the trend of increased spending across Europe, but also on a broader purchasing base as greater autonomy and influence increasingly lie with patient-facing staff. Its titles and events target nurses, GPs, pharmacists as well as hospital administrators. In its private wealth management business, Campden serves the Ultra High Net Worth investment market, a segment of potent spending power that is highly resilient regardless of economic and market conditions. The titles and events target the investors and their advisors.
Eric Tung of Matrix said: “From our first meeting we were convinced that this was a business for us because of the strength of the management team, the quality of the products and Campden’s strong business relationships.This is an eminently scalable business and we expect significant sales growth.”
London-based Campden is profitable, with annual revenue of £6 million and employs 56 permanent and contract staff.

Vectair Systems
In January 2006 Matrix completed the £3.5 million MBO of Vectair Systems Limited, a leading provider of air care and sanitary washroom products. Matrix invested £1.1 million with the remaining funds comprising cash and roll-over from management and senior debt from Bank of Scotland.
Vectair designs, sources and sells products primarily for use in office and commercial washrooms.The proprietary products comprise fragrance dispensers and sanitizers that, once installed, generate recurring revenue.
Vectair’s products are supplied to third party service providers and directly to end users. Typical customers range from British Telecom to PHS Group. An important component of future strategy is to increase market penetration in Europe from the company’s existing base of 80 distributors.
The MBO team is led by Paul Wonnacott, co-founder and Managing Director and includes existing directors, Joe Ovenden, Richard Martin and Colin Davies.
Jonathan Gregory, Director at Matrix, said: “Workspace services provision offers attractive investment opportunities in companies with high levels of annuity income. Corporate activity and consolidation is a feature of this sector with recent transactions involving PHS Group and Warner Howard. Vectair has an excellent customer service record and an impressive management team that is driven to grow sales and profits substantially.”
Basingstoke-based Vectair is profitable, with annual revenue of £5 million and employs 20 staff.

Youngman Limited
In October 2005 Matrix backed the buy-out of Youngman, the UK market leader in the manufacture and supply of aluminium access towers and ladders.
The deal saw Matrix acquire a significant minority stake in the business, with HSBC (Birmingham) providing senior debt and debtor/stock finance.
Youngman was founded in 1926 and became part of the SGB Group in 1992. The business has been acquired from SGB’s parent, Harsco Corporation, a diversified international industrial services group. Youngman serves the UK building and contracting sectors primarily through sales to the leading plant-hire companies. Customers include Speedy Hire, HSS, Wickes and Travis Perkins.
The business is based in Maldon, Essex and employs 300 people. Annual turnover is £37 million. The management team is led by Paul Bentley who previously ran Ruberoid Building Products, supported by Chris Owen, Director of Pro-tec Windows UK , the incumbent managing director, John Bungay and finance director, Jerry Stapleton.
Matrix director, Jonathan Gregory said that Youngman has an enviable position in the UK market with excellent customers who are growing through acquisition. Barriers to entry are becoming higher due to a more onerous health and safety regime for contractors.
For further information please visit: www.youngmangroup.com.

Maynard Scotts Limited
In September 2005 Matrix backed the MBO of Maynard Scotts, a leading manufacturer of desserts and cakes for the food service industry.
Matrix invested £2.1 million equity with £2.9 million senior debt and £1.3 million debtor finance provided by GE Commercial Finance.
The management team was led by existing Managing Director, Chris Ormrod and Operations Director, Bill Phillips. Matrix introduced an investing finance director, Jim McLaughlin earlier this year.
The business was founded in 1862 by William Tanner Maynard and now operates from a 12,000 sq ft purpose built freehold bakery in Taunton, Somerset with 180 employees. Around 200 product lines comprising cakes, cheesecakes and pastries are produced. It is the largest manufacturer of Chocolate Fudge Cake for food service customers in the UK. Maynard’s major customers are the key food service distributors and pub groups, including Brake Brothers, Spirit Group and the Hard Rock Café Group. Annual turnover is £12 million.
For further information please visit: www.maynardscotts.co.uk          

SectorGuard
In August, Matrix made a £600,000 investment into SectorGuard, an AIM-quoted security company providing manned guarding, mobile patrols and alarm response services, as part of a £3 million capital raising.

Great Northern Envelopes
Matrix co-invested in MBO of Great Northern Envelopes (GNE), a leading UK supplier of envelopes to major financial institutions and direct mail operations. The MBO team was led by Managing Director, Warren Shermer. The company, previously part of the Adare Group, is recognised as the ‘driving force’ in envelope supply and solution provision, with the management team having created a unique culture that focuses on flexibility, service and ultimately providing a healthy and positive customer experience. This focus on service has underpinned GNE’s rapid growth, which is expected to continue following a planned capital investment programme.
Bob Henry of Matrix Private Equity Partners said: “All of our research and due diligence confirmed that GNE has a very strong management team and a unique business model both of which cause it to generate very good returns in what is perceived to be a commodity industry.”
Located in 77,000 sq ft premises on the Treefield Industrial Estate in Leeds, GNE has a turnover of over £23 million and has 120 employees.

FH Ingredients
In February 2005, we completed the £5m BIMBO of FH Ingredients from the Harrington Food Group and the first investment by our Matrix Income & Growth VCT. The company, based in Eye, has a turnover of £6m and employs 40 permanent staff, taking on additional labour in the peak season. FH buys herbs from local growers, washing, drying and freezing them, before selling on to large food manufacturers. The herbs are packed within 3 hours of being picked in the field. For further information please visit: www.frozenherbs.co.uk.
Jonathan Gregory, Director of Matrix Private Equity Partners, said “FH is very much the solid lower risk type of deal we like. The company has a good, defensible position in its niche market and the management team is appropriately skilled and driven to grow the business significantly in the medium term.”

Realisations

BBI
Matrix has realised over 3 times their original investment of £2.3 million through the sale of their shareholding in AIM-listed BBI Holdings plc (BBI), a healthcare business that focuses on diagnostics and diabetes. The realisation opportunity arose through BBI’s recommended all cash or shares offer by Inverness Medical Innovations.
Matrix funds have received £7.8 million proceeds over the seven year life of the investment, achieving an IRR of 31%.
BBI manufactures and supplies gold reagents which are used in millions of rapid diagnosis tests globally. More than 500 million tests take place every year that rely on the gold reagent component. These reagents are used to bind with specific antibodies or antigens in tests to provide a positive or negative visual signal.
BBI also has a growing number of diabetes care products. These include GlucoTabs which are sold in Asda and Boots to boost the strength of diabetes sufferers.
The organisation operates from 5 Locations across the UK and the USA, covering most geographical regions including, Asia Pacific, Europe and North America.
Matrix has enjoyed a seven year relationship with BBI, first backing the MBO led by Chief Executive, Julian Barnes in November 2000.
Matrix Private Equity Partners was closely involved with the business from the start of its investment, including working through some difficult and challenging times, requiring an additional investment. As a result of the support given by Matrix, Jonathan Gregory was asked to stay on the board after BBI floated on AIM in April 2004.

Ministry of Cake
Matrix has realised 2.5 times its original investment through the sale of Ministry of Cake to the Greencore Group. Matrix has received £5 million cash from the sale and over the 26 month holding period the investment generated a 58 per cent IRR.
Ministry of Cake (formerly known as Maynard Scotts) is the leading manufacturer of desserts and cakes for the food service industry. The business was founded in 1862 by William Tanner Maynard and operates from a 12,000 sq ft purpose built freehold bakery in Taunton, Somerset with 200 employees. Around 200 product lines comprising cakes, cheesecakes and pastries are produced. It is the largest manufacturer of Chocolate Fudge Cake for food service customers in the UK. Their major customers are the key food service distributors and pub groups, including Brake Brothers, Spirit Group and the Hard Rock Café Group.  Bob Henry led the deal at Matrix Private Equity.  Bob Henry said: “When we backed the MBO of Maynard Scotts in September 2005, the need to re-brand the business as it transformed from a regional bakery into an international manufacturer of cakes became increasingly obvious. The management team worked hard to develop Ministry of Cake and we have worked alongside them to drive the company’s growth and development. The sale to Greencore is a natural fit and will enable additional opportunities for the company’s continued development.”

Ruskin Homes
Matrix has realised 2.6x its investment through the sale of its shareholding in Ruskin Homes, achieving a 25% IRR over the investment's five year holding period.
Ruskin is a specialist in the development of flats and housing on brownfield sites. Matrix’s exit was through a share buyback by incumbent management, Garry Hall, Chief Executive and Ross McEwan, Finance Director.
Matrix first invested in 2002 to finance the management buy out from the Company’s founder shareholders. Over the last three years, the Company has gradually expanded its area of operations outside London and the South East. During Matrix’s involvement, Ruskin's profits have grown significantly with EBITA more than tripling from £1.2m to £3.8m. Sales have grown 35% from £14m to £19m.
Management approached Matrix earlier in 2007 with the proposed buyback. Following review of the premium to net asset value, the investor decided to conclude the off-market deal.
Matrix has been an investor in Ruskin since 2002 investing £3m at the time for a 43% stake in the business on behalf of its institutional client, the Baring English Growth Fund. The original £13m deal was supported by debt provided by Royal Bank of Scotland. Caterham-based Ruskin was founded in 1991. Ruskin was one of 14 Matrix portfolio companies in the Construction and Support Services Sectors.

Original Additions
One of the UK’s most innovative beauty products companies has been refinanced via a debt package from RBS. The deal has repaid all Matrix's original funding but Matrix maintains the same shareholding.
The company supplies false nails and eyelashes to multiple retailers, including Boots, Superdrug, Tesco and Sainsbury’s. Forecast turnover for the current year is £21m, with export sales showing particularly strong growth.
Matrix backed the buyout of Original Additions in 2004, alongside Barclays Ventures.

Image Source
A leading global provider of royalty-free images has been refinanced via a debt package from RBS. The deal has repaid all Matrix's original funding but maintains the same Matrix shareholding.
Headquartered in London and with offices in Cologne and New York, the company has grown rapidly over recent years, significantly increasing the number of images in its library.
Matrix backed the management buyout of Image Source in 2003. The business has since seen revenues triple and profits increase almost ten-fold. The new finance facility will enable Image Source to invest further in image creation.

Maven Management
A UK market research agency, has been sold to marketing services group Munro Global. The deal has generated a 2 X cash return for Matrix.
High Wycombe based Maven specialises in customer and employee satisfaction surveys for European blue chip clients including Mercedes Benz, British Gas and Tesco Personal Finance.
Matrix backed the management buyout of Maven in 2000.

SMS
Secure Mail Services, the Northampton-based provider of solutions for valuable mail and small parcels to businesses was sold to Candover in September 2006. It was combined with delisted DX Services to form a larger mail group, Mail Acquisitions.
Matrix advised VCT, TriVest realised a £3 million gain over cost. Matrix backed the MBO of SMS in 2002 and more than tripled the £1.3 million original cost of investment, delivering a total cash return to TriVest of £4.2 million. Further consideration of up to £1.5 million may also be paid to TriVest over the next 3 years.
SMS was established in 1991 to provide banks with secure delivery of credit cards in order to combat losses through fraud. The company operates from over 30 depots nationally and employs around 550 staff and couriers. In its last financial year SMS generated revenues of £46 million and profits of £5 million.
In 2002, Matrix led the BIMBO of SMS. The business had a challenging time following the transaction, with four of the five BIMBO team departing within 18 months, and a refinancing that required further equity investment. However, Brian Taylor and James Greenbury joined as Chairman and CEO of the company and under their leadership the business was turned around and a number of new substantial contracts quickly secured.
Matrix director, Bob Henry, who made the original investment commented, “We are indebted to the management team for a tremendous result for all shareholders. They were instrumental in negotiating the sale of the business and I heartily congratulate James Greenbury on his well-deserved appointment as CEO of the enlarged group.”
The deal sees Mail Acquisitions well-placed to deliver significant benefits to customers. With pro-forma turnover of £175 million and 1600 employees, it handles 270 million mail items per annum.

Magicalia
Magicalia Limited, a leading online publishing business, was sold in May 2006 to Exponent Private Equity for £13m. The company focuses on specialist interest sectors, ranging from cycling and fishing through to parenting and consumer electronics.It also operates an ecommerce platform for specialist mail order retail clients.The transaction generated a capital return of £1.85m for Matrix representing an IRR of 35% and a 4.6 times money multiple over five years.Matrix invested £400k in Magicalia in January 2001, leading a £1.1m early stage, pre-revenue round including Atlas Ventures and a group of angels, led by Amazon Europe co-founder Rikki Tahta.

Devlin Group
Devlin, one of the world’s leading suppliers of custom keyboards, was sold in May 2006 to its management team for an undisclosed sum. Matrix invested £2.3 million to fund the original MBO of Devlin in 2000.

Rohan Designs
Rohan, a designer and retailer of outdoor and adventure clothing was sold in May 2006 to its management team for an undisclosed sum. Rohan is a well-known and respected brand name in the outdoor clothing market, positioned at the premium end. Matrix invested £1.125million to fund the original MBO in 2001.

Catalist
Catalist, a leading international provider of information on the retail petroleum and forecourt market has been sold to Experian for an undisclosed sum. This follows Experian’s recent acquisition of Footfall (see below). Experian is a global information solutions company and leading provider of retail data, analysis and consultancy. Both Catalist and Footfall were spot on the acquisition brief and further establish Experian as a global retail and property intelligence group.Matrix invested £1.5 million in Catalist in 2000. John Brandon of Matrix said: “This is a great deal for Catalist clients to be offered new products and additional datasets and for Catalist shareholders including Matrix who have made a healthy return on their investment.”

FootFall
Footfall, the European market leader in customer counting technology and retail information integration has been sold to Experian for an undisclosed sum, returning 3.1 times Matrix’s original investment. Matrix led the last round in June 2002, pricing the deal on behalf of a syndicate of existing investors. Matrix invested £750,000 as part of a £2.65 million round. Since it was founded in 1991, Solihull based Footfall has established customer counting as a key performance indicator for retail property professionals enabling them to achieve maximum operational efficiency. Their Retail Footfall Index (RFI) is regarded as the industry standard benchmark for shopper visits.

Sit-up.com
Sit-up ltd, a leading British TV retail group, announced on May 12th 2005, that            Telewest Global Inc., through its wholly-owned subsidiary Screenshop Ltd, made an unconditional cash offer to purchase all the sit-up shares that it does not currently own, in a deal which values sit-up at over £194 million.In 2004, sit-up’s revenue was            £206 million, with profit before tax at            £11 million. Its growth rate, since the company’s first TV auction was broadcast in October 2000, was featured in the            Sunday Times ‘Fast Track 100’ List in December 2004 – where sit-up ranked as the fastest growing UK company with a turnover of over £100 million. Matrix led a syndicated VCT investment into Sit-up in October 2000 and this sale will mean a cash return of 3.3x the total investment.

AAR
Matrix has realised its investment in AAR, a specialist advertising consultancy, via a secondary MBO. Mike Walker, who handled the realisation for Matrix, reports a very satisfactory 20% IRR from the investment over a six year period.For decades AAR has been the leading matchmaker between companies and agencies in the UK marketing services community and is involved in a significant number of the advertising industry roster changes in the UK each year. Since the MBO, AAR has expanded its coverage to incorporate media, PR, digital, direct mail and design agencies.

Holloway White Allom
Specialist property contractor, Holloway White Allom, has provided a partial realisation to Matrix Private Equity Partners who invested £1 million in backing the MBO of the company from John Laing Plc in November 2002. Particularly strong trading and cash generation has provided cash distributions to Matrix to date of £2.6 million without any equity dilution. The company is considering an AIM flotation early next year.