Investment Completion - Clamason Industries Limited
11 January 2017
- Management buy-outs attractive but often hard-to-access for private investors
One of Europe’s leading manufacturers of precision-pressed products, West Midlands-based Clamason Industries Ltd, is set to boost its capacity for growth, through an MBO backed by Connection Capital, the specialist private client investment business.
Connection Capital clients invested £5.4million to acquire a majority stake in Clamason, which makes a diverse range of high spec parts and bespoke components for the medical, power, consumer goods and automotive sectors from its sites in the UK (near Birmingham) and Slovakia. It employs approx. 200 people and generates revenue of more than £20m.
The company supplies blue chip clients such as Delphi, Bosch, Visteon, Sanofi, Schneider Electric and Siemens, and its components are used in Daimler, Volkswagen, Ferrari, Nissan, Volvo and General Motors’ vehicles. 95% of its contracts are multi-year, sole-source arrangements, highlighting its customers’ focus on product quality and reliability of supply.
Established in 1947, Clamason has a long record of sustained growth, strong and well-founded revenue and profit forecasts and significant ongoing opportunities to expand and develop the business over the next few years. It is already in the process of doubling the size of its Slovakian facility, and has secured many new long-term contract wins with many more in the pipeline.
Connection Capital says that Clamason’s international client base and existing production capabilities in Europe place it in a good position to withstand the risks thrown up by uncertainty over Britain’s forthcoming exit from the EU. The structure of the management buy-out (MBO) is designed to enable Clamason to exploit new growth opportunities, including through further capex as required. The deal takes the form of a loan with a five-year bullet repayment, providing investors with a current yield of 6%, rising to 8% after two years.
Bernard Dale, Managing Partner at Connection Capital says, “Clamason has real momentum and this investment will provide it with the vital financial capacity it needs to capitalise on its potential to grow and develop its business.”
“Being a leading manufacturer in its field, boasting numerous long-term blue-chip contracts across a diversified range of capabilities and industries, with a consistent growth record, a strong order book and an established base in Europe, this asset-backed MBO proved a highly popular investment opportunity for our clients.”
“Added to this, the deal was attractively-priced, and offers the possibility that the company could even outperform its already strong growth prospects.”
He adds, “In our experience, private investors like MBOs because they enable them to invest in established, profitable, stable companies of some scale, driven by proven and highly motivated management teams with ambitious plans for their businesses.”
“But it’s also a type of deal that many investors would struggle to access alone, which is why our model of aggregating capital from multiple investors and acting as a single point of contact works so well both for our clients and for the companies we invest in.”
Neil Geoghegan, MD of Clamason says, “This is a very exciting moment in Clamason’s history. As we embark on the next stage of building our business, this investment will give us the financial scope to exploit growth opportunities with both new and existing clients and service areas.”
“For us, it’s a real endorsement that so many private investors have seen the value in our company and are keen to back us as we put the next phase of our strategy into action.”
If you are interested in receiving more information about future investment opportunities and are not yet a client of Connection Capital, please contact Steve Wilson.