Deal announcement - Carter Accomodation

News: Investment News | 13 July 2015

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We are pleased to announce the completion of a £5.3 million investment to back the management buy-out of a leading supplier of mobile cabins and portable buildings, Carter Accomodation.

  • Investment date: July 2015
  • Investment size: £5.3m
  • Legal advisers to Connection Capital: Gateley

Client interest in the transaction was high, so the investment was heavily oversubscribed. The equity requirement from external investors was £5.3million as part of a total fund raise of c.£20million. The funding includes a refinance of the existing fleet by PNC Business Credit and a considerable level of growth capital facility to fund the fleet’s expansion.

Carter is a temporary accommodation hire business providing high quality modular buildings and cabins to a variety of sectors including construction, energy, education and agriculture. It has a very consistent track record of profitable growth since 2000 and continued to grow through the recession (despite a very significant slowdown in the construction market) due to its investment in a bespoke range of class leading, high specification accommodation products and its quality of service. Carter is now the eighth largest supplier of temporary portable accommodation in the UK and is accelerating its rate of profitable growth. The deal was secured by Connection Capital off-market, through its relationship with the Non-Executive Chairman, a Connection Capital client.

Connection Capital structured the transaction in a secure and tax efficient manner for its clients. The financing is predominantly via a secured loan, with opening asset cover (post-external debt) of 1x, which rises quickly as profit is generated. In place of paying interest (taxed as income for individual investors) cash will be distributed via loan repayments over six years (no tax due on capital repayments). The plan is to exit within five years. The target return is 3.5x for Connection Capital clients on the management plan and 2x on a significantly sensitised case (both net of fees and carry).

“Investors look to diversify their portfolio holdings across a range of different types of assets, and when it comes to investing in unquoted companies, they want a spread of different types of businesses to suit their risk appetite. Our investment model enables them to do this.” - Claire Madden, Partner

With c.£170m under management, our recent private equity transactions include growth capital investments in Light Cinemas, an established cinema operator, and Redeem Holdings, a global leader in re-commerce (recycling) of electronic gadgets; the MBOs of education software company, Impero International, and Virgin Wines, the online wine retailer.