Total Capital Partners exits Arthouse

NorthEdge Capital has acquired a majority stake in Arthouse. Total Capital Partners was the seller. Financial terms weren’t announced. U.K.-based Arthouse supplies wall coverings and home decorations to DIY multiples and independent retailers.

PRESS RELEASE

20th October 2015: Arthouse www.arthouse.com, one of the largest suppliers of wallcoverings and home decoration products to DIY multiples (including B&Q, Wilkinsons, Homebase, The Range and B&M) and independent retailers, today announced that it has completed its second management buyout. The Rossendale headquartered company took itself independent in 2007, securing backing from the team at Total Capital Partners (“Total Capital”). Total Capital is an independent firm that specialises in providing combined equity and debt funding for small and medium-sized businesses in the UK. Moving forward, the management team will be backed by NorthEdge Capital, which has acquired a majority stake in the business.

This marks the fourth and final exit for Total Capital’s first fund, a 2006 vintage fund that has delivered an overall return of 1.9x. In line with its differentiated approach to funding SMEs, Total Capital provided all the debt and equity needed to back the company’s first management buyout, which was led by Managing Director Anita Kenyon and three company directors in November 2007. Since then, the business has delivered impressive growth, increasing its annual turnover from £17 million to £25 million and its employee base from 37 to 65 people.

Since becoming independent, the management team has worked with Total Capital to diversify its product lines, sales channels and supplier base, and to expand its network of stockists internationally.

With the support of NorthEdge, the firm will further strengthen its presence in the UK, and expand into overseas markets, in particular the US and Middle East. It is also aiming to enhance its digital offering, and make further bolt-on acquisitions, with focus on other companies in the UK targeting overseas markets.

Jon Pickering, Director at NorthEdge Capital, commented: “Securing the investment in Arthouse demonstrates the skills of the team at NorthEdge in originating off-market private equity transactions and also delivering wider funding opportunities for entrepreneurial businesses across the North of England. We have also been able to make use of our extensive network who worked alongside us to support us on this transaction.”

“It is great to be working with Anita and the management team – they are entrepreneurially minded with a comprehensive understanding of the market in which they operate. They have clear aims and solid plans for the future, and their excellent track record means that they are ideally positioned to target growth. With recent trends indicating that the favourable economic climate has prompted renewed interest in the home furnishing and decoration sector, this is an opportune time for the team to set its plans into motion, and we are all excited to support the team on the delivery of further successes.”

Natalie Eastham, a founding partner of Total Capital and non-executive director of Arthouse, commented:

“Anita and the team at Arthouse have done a fantastic job of leading the company through its first years of independence. During this time, the business has successfully diversified to become one of the country’s leading suppliers of interior decor solutions and has achieved an impressive level of growth. It has laid strong foundations for future growth and we wish the company well as it embarks on the next stage of its development with new partners.

“Our relationship with Arthouse very much typifies Total Capital’s approach to investment. We are a highly selective and active investor, who works closely with incumbent management teams to develop and shape businesses as they grow – often in situations where an institutional investor is involved for the first time.

“Our exit from Arthouse is all the more significant for us as it marks the fourth and final realisation from our first fund. We are delighted with the performance of this blended debt and equity fund, which has provided our investors with an attractive alternative to the typical leveraged equity model, access to an appealing segment of the market and a swift return of capital.”

Anita Kenyon, Managing Director of Arthouse, commented:

“The investment that we have received from NorthEdge marks the next stage of development for Arthouse. The investment and support that we received from Total Capital has enabled us to shape the business that we are today. At the outset, they were able to tailor their financing package to our needs, offering us all the equity and debt needed to secure a majority stake in the business and ultimately creating the right capital structure to support our growth plans.”

Jon Pickering, Director at NorthEdge, led the deal alongside Partner Ray Stenton, Investment Manager Phil Frame, and Investment Executive Harry Jones. Jon and Harry will join the board as Non-Executive Directors.

Advisers:

Sell-side advisers:
KPMG – Jonathan Boyers and Alex Hartley
Pinsent Masons – Helen Ridge

Management Advisors:
UNW – Paul Kaiser
Ward Hadaway – Katherine Hay-Heddle

Buy-side advisers:
DWF – Jonathan Robinson and Vicky Ross
Financial DD – Matt Copley and Bob McDermott
Commercial DD – Simon Bones

Ends