UK investor BGF has backed Victoria, a manufacturer of carpets and floor coverings. This is BGF’s first investment in a publicly listed company.
BGF (Business Growth Fund), the independent company established in 2011 in Birmingham to help Britain’s growing businesses, today announces a major strategic development with a £10m investment in Victoria PLC, (LSE: VCP) the manufacturer, supplier and distributor of design-led carpets and floorcoverings.
Investment in Victoria PLC
This is BGF’s first investment in a publicly listed company.
BGF has supported Victoria by way of a £10m investment to support its growth strategy, with the aim of building a strong and sizeable flooring group.
Founded in 1895, Victoria designs, manufactures and distributes carpets and other floor coverings, targeting the mid to high-end market under a number of different brands. Headquartered in Kidderminster with manufacturing and retail operations in Australia, the business employs over 600 people.
Victoria’s carpets are found in Buckingham Palace, Balmoral Castle, and several other Royal residences. It manufactured the carpet used in Westminster Abbey for the Royal Wedding and was recently granted a Royal Warrant to Her Majesty The Queen. One of Victoria’s largest customers is John Lewis.
BGF is backing a strong management team led by Executive Chairman, Geoff Wilding, who successfully oversaw the acquisition and integration of Westex, which was purchased by Victoria in December 2013.
Acquisition of Abingdon Flooring Limited
BGF’s investment will enable Victoria PLC to make the £7.655m acquisition of Abingdon Flooring Limited, a UK carpet manufacturer. Operating from facilities in South Wales, Kidderminster, and Yorkshire, and employing a workforce of 500 people, Abingdon manufactures and distributes mid-range carpets and hard flooring across the UK, producing in excess of nine million square metres of carpet per annum. Abingdon is the UK’s largest privately owned manufacturer of quality carpets with ranges including Wilton Royal and Kosset. For the financial year ended 31 March 2014 Abingdon generated turnover of £75.1m.
Victoria is ideally placed to create efficiencies of scale by consolidating the UK’s fragmented carpet and floorings manufacturing market, providing a broader range of products and building on the already high levels of customer service.
This is the first time that BGF has invested in a publicly listed company but the nature of BGF’s investment follows a similar approach to that already used successfully for a number of private companies. The BGF investment takes the form of £10m of loan notes with a cash-paid coupon, with no capital repayment for the first five years and the capital then repaid over the following three years, as well as an option to buy equity in Victoria PLC at a later date. BGF’s investment is unsecured and flexible, in line with its approach as a provider of capital to support companies’ development over the longer term.
Investing in listed companies is a natural next step for BGF in its drive to provide long-term equity investment to those growing companies that do not have enough access to this source of capital. Many companies that meet these criteria are currently listed.
In addition to the new capital injected by BGF, Barclays will continue to support the Group through extension of its lending facilities. As part of today’s announcement, Gavin Petken, Regional Director at BGF, joins Victoria’s Board.
Stephen Welton, CEO of BGF, commented:
“This investment marks a significant milestone in both Victoria and BGF’s corporate development. AIM represents an opportunity for BGF to materially extend its addressable market and support an even broader range of growing companies, both private and public. This is our first listed company investment and our intention is that there will be many more as awareness of our offering grows.
“Using BGF’s existing quick and efficient funding process we have invested £10m of growth capital to support a high quality acquisition platform managed by an excellent team. We hope this approach encourages listed businesses, shareholders and advisers to consider BGF a flexible and supportive, long-term investor equally applicable to both private and public fundraising.”
Gavin Petken, BGF’s Regional Director for the Midlands, added:
“Victoria has built a fantastic reputation in the UK and overseas for supplying a wide range of quality flooring materials at a range of price points, with high levels of service. We saw this as an excellent opportunity to back a company with global ambitions and the potential to expand organically and through acquisitions such as Abingdon which adds significantly to the Group’s product offering.
“While Victoria is a listed company, we view it in the same way as our private portfolio companies; a strong UK business with significant growth prospects. For this reason, we are delighted to be working with Geoff and his team.”
Geoff Wilding, Executive Chairman of Victoria, commented:
“We are delighted that the Company has acquired Abingdon with the support of BGF. The acquisition of Abingdon Flooring represents the second significant step forward for Victoria, following the acquisition of Westex in December last year. By integrating Abingdon into the Group, we anticipate accelerating Victoria’s growth by enhancing its combined offering and reach across the UK.
“Overall, when added to our existing operations the two acquisitions have together substantially increased the scale, breadth and reach of Victoria’s offering and are expected to be immediately earnings enhancing. Our focus is on integrating the business and delivering the synergies and growth.”
Financial due diligence: BDO (Graham Elsworth and Vinny Patel)
Legal – Wragge Lawrence Graham (Jeremy Millington)
Legal for Victoria: Brown Rudnick (Lena Hodge)