Palatine Private Equity has acquired Character World from RJD Partners in a secondary buyout valued at 36 million pounds. In addition to investing 16 million pounds in Character World, Palantine has also received funding from RBS for the transaction. Grant Thornton served as financial advisor to Palatine. As a result of the deal, Palatine’s Andy Lees and James Winterbottom have been appointed to Character World’s board of directors .Based in the UK, Character World is a provider of licensed bedding and associated homeware products for children.
Palatine Private Equity has backed Character World, the UK’s leading licensed bedding specialist, in a £36m secondary management buyout.
The Cheadle-based company, which employs 74 UK staff and eight in China, is led by brothers Mark and Danny Schweiger. The deal sees an exit for RJD Partners who funded a management buyout with the Schweigers in 2008.
Founded in 1998, Character World works with some of the world’s leading character, gaming and music entertainment companies, providing licensed bedding and associated homeware products for a wide range of children’s age groups from preschool up to students. It acquires the UK product licensing rights for a comprehensive range of brands owned by Disney, Marvel, Lucasfilm, Lego, Nickelodeon, Hasbro, Mattel and Warner Brothers. Character World also manages other brands including Peppa Pig, Hello Kitty, Thomas The Tank Engine and One Direction, and has recently secured the licencing rights for a number of these globally renowned brands in mainland Europe.
The business has enjoyed substantial growth and is on track to reach sales of over £32m to December 2014. It supplies several major retailers in the UK, including Next, Tesco, John Lewis, Argos, Asda, B&M, TJ Morris and Smyths Toys. The newly secured international licences will allow the company to meet increased demand from many leading European retailers.
The £16m investment from Palatine and funding from RBS will allow Character World to consolidate its UK market leading position and capitalise on international growth. Palatine partner, Andy Lees and Investment Manager, James Winterbottom will join the Board as non-executive directors.
Danny Schweiger, joint managing director at Character World, said: “We’re delighted Palatine will be backing Character World in the next phase of our exciting journey. My brother Mark and I willcontinue to run the business and our focus going forward will be on growing our UK business whilst becoming a successful international company. The future is full of opportunities that we intend to grasp.”
Andy Lees, partner at Palatine Private Equity, added: “This is an incredibly exciting time for the business after securing a number of quality licences with high-profile brands in Europe to build on the market leading position in the UK. The managementteam has done a fantastic job in growing the business over the past few years and it’s a pleasure to be working with them as they gear up for international growth.”
Character World will continue to be supported by RBS, which has provided total debt facilities of £22m.
Clearwater International advised shareholders of the company on the sale. Partner, Gareth Iley commented:“Character World has cemented its position as the clear leader in the UK licensed textiles market and significantly increased it’s retail customer base. With the business increasingly focused on Europe, Character World is facing exciting opportunities and significant growth potential. It is another example of an outstanding management team leading a UK consumer business to be a success internationally.”
Grant Thornton provided corporate finance advice to Palatine, while a team led byRebecca Grisewood at Gateley provided legal support.
Jon Schofield and Andy Dodd of Dow Schofield Watts and Ian Gillis of Hill Dickinson advised the management team.
Other advisers on the transaction included The Berkeley Partnership (operational due diligence), The Quinn Partnership (management due diligence), PwC (commercial due diligence), Grant Thornton (financial due diligence and tax), Marsh (insurance due diligence) and Baker Tilly (tax due diligence).
About Palatine Private Equity
Palatine Private Equity is an entrepreneurial, Partner led private equity business with a focus on backing like-minded people. The Partners have over 60 years’ experience working with entrepreneurs and management teams in private equity backed businesses.
Founded in 2005, Palatine raised its maiden £100m fund in 2007. This is now fully invested and has generated market-leading returns, including XLN Telecom (4.5x return), Air Energi (3x return) and Hallmark Hotels (2x return). The firm is currently investing from its second fund, which closed in 2013 achieving the target size of £150m.
Palatine’s portfolio currently comprises MJ Quinn, Electranet, MoneyPlus Group, Wealth at Work, Selection Services, Chase Templeton, Playnation, EPI Group, icelolly.com, Forrest and Gusto Restaurants.