Property consultancy GVA Grimley has bucked bad investment market conditions to secure a £40 million injection of private equity funding from Lloyds TSB Development Capital.
The deal was negotiated largely by Birmingham-based professionals. The new capital will help to finance a restructuring operation aimed at helping Grimley, which employs 340 people in Birmingham, to expand.
This will involve Grimley converting from a limited liability partnership into a limited company with effect from November 28.
As a result, the firm's equity partners, and in due course its non-equity partners, plus a number of other senior employees, will collectively own the majority of the business. Lloyds TSB Development Capital (LDC) will become a substantial minority shareholder, according to a statement released today.
Chief executive Bob Barnett said: "The current 71 equity partners have enjoyed the benefits of over 15 years of sustained growth in income and profits arising from our loyal client base and outstanding people.
"We have ambitious plans for the future and we now wish to share our equity more widely to include all of our 165 non-equity partners who will be invited to become shareholders in the new company."
Converting to limited company status will make its easier for Grimley to expand, both organically and via acquisitions, Mr Barnett said.
"LDC will help facilitate our continued growth and their investment is a testament to the diversity and stability of our business," he added.
In the year to April 30, Grimley, which has 12 regional offices and more than 1,200 staff, generated revenues of £148 million, 67 per cent of it from consultancy work.
The Birmingham office grew its revenues by ten per cent to £22 million during the period.
Malcolm Gloster, regional senior partner for Birmingham, said negotiations with LDC had "become more difficult" as the private equity market began to dry up. The fact that the deal had been finalised , however, was testimony to the quality of Grimley's business and its creditworthiness.
His comments echoed those of Wolverhampton brewer and pub operator Marston's following a £330 million securitisation deal – one of only a handful to find market favour recently – earlier this week.
Mr Gloster added: "This is a significant development that will enable us to reward the existing team, that has contributed to GVA Grimley’s success and will help us attract high calibre individuals.
"Over the last five years, the Birmingham office has had an impressive 66 per cent increase in fee income and the restructure will support further growth and widen development opportunities."
"LDC is a strong partner for GVA Grimley in this region and the deal was supported by local advisers, which is another great achievement for Birmingham’s professional sector."
Tim Farazman, managing director of LDC, said" We are confident that GVA Grimley’s strong regional offices, growing London presence, broad client base and high proportion of stable consultancy revenue offer an excellent platform for growth."
Steve Halbert, head of mergers and acquisitions at KPMG Corporate Finance, who advised Grimley, said: "This is a market leading and very innovative transaction for a partnership.
"It reorganises GVA Grimley’s capital structure and widens ownership to include all non-equity partners and other senior management."
Grimley was advised on tax by Narinder Paul of KPMG and legal advice came from Chris Rawstron and Mark Beardmore of DLA Piper.
Advisers to LDC included Carole Hindle of Deloitte (tax), Andrew Stylianou of Wragge & Co (legal), Alan Kennedy of KPMG (financial due diligence), Jonathan Sparey of LEK (commercial due diligence) and John Petrie of Egon Zhender (management due diligence).