Investment Completion - Rowan International

News: Investment News | 11 December 2017

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Private investors see value in backing MBO of one of Europe’s largest branded stock re-sellers to discount market for an undisclosed sum

  • Connection Capital clients invest to take majority stake in Rowan International
  • £50m turnover company helps brand-owners recoup costs of overproduction

One of Europe’s largest residual stock management distributors, which specialises in buying and re-selling branded goods to the discount market, has secured funding from Lloyds Bank plc and £5million from private investors through Connection Capital, the specialist private client investment business.

The deal will enable Rowan International’s strong and dedicated management team to accelerate the development and growth of the business, for example by expanding its supplier relationships across Europe and increasing its focus on higher-margin goods.

The company purchases surplus stock of fast-moving consumer goods (FMCG) such as leading-brand toiletries and cosmetics or household items like detergent or cleaning products that are left over, for instance when a promotional campaign comes to an end. It then re-sells it to leading national and international discount retailers.

It therefore fulfils an important role for brands, allowing them to recoup the direct costs of manufacturing on unsold goods, while disposing of residual stock in a way which does not impact negatively on brand value or conflict with the manufacturer’s own established distribution channels.

Rowan International was founded 30 years ago and now has strong relationships with many of the leading industry brands, including Johnson & Johnson, Unilever and Procter & Gamble.

In addition to providing financial backing for the MBO, Connection Capital has also been able to offer practical expertise to Rowan, by introducing a highly experienced new Non-Executive Chairman to help support the management team as it embarks on its next phase of growth.

John Cleland, who is also investing alongside Connection Capital’s private investors in the deal, has been CEO of multiple private equity-backed businesses and has held senior roles at Asda, Sainsbury’s and Somerfield.

Connection Capital clients who chose to invest in the opportunity were able to do so in multiples of £25,000 and were attracted by the cash-generative nature of the business and the management team’s plans for growth.

Pascal Wittet, Investment Director at Connection Capital says, “The secret sauce in Rowan International is its ability to sell residual stock outside the country it was sourced in thereby protecting the market for the brand owner – their capabilities in this area are very strong which is what differentiates it.”

“Rowan International is a highly cash generative business, trading strongly and is led by a driven management team who have what it takes to harness its significant potential for further growth.”

“It’s exactly the kind of compelling proposition we seek to offer to our clients. The fact that the opportunity was oversubscribed shows that Rowan’s model, management team and scope for value creation really resonated with them.”

John Place, CEO of Rowan International says, “As a management team, we have built significant momentum behind revenue and profit growth, demonstrating that we have the skills and dedication to drive the company forward and capitalise on new opportunities.”

“We are delighted that Connection Capital has recognised this in backing our MBO, and with its support we look forward to the next exciting stage in our evolution.”