Private equity firm set for £15m investment spree

Jun 18 2009 by Peter McCusker, The Journal

PRIVATE equity business NVM is preparing for a £15m spending spree with three companies in its sights and possibly more to follow.

The Newcastle company, which manages more than £160m of funds, sold its stake in three companies last year, increasing the value of its initial stake in those businesses from £2m to £6.5m for its investors.

It now has healthy cash reserves to buy into companies it sees as having excellent prospects.

Managing director Tim Levett said: “We have a number of prospects coming in the next two years and this is a good time to buy into companies with market valuations being depressed.

“The companies which are still standing when we come out of the recession will also benefit from an improved competitive position.

“We are looking at two prospective companies in the renewables sector, with one of these being based in the North East, and the third is a media software company.”

Next week sees the annual general meeting of Northern Investors, the plc which NVM manages. Its results for the year ending March 2009 show the value of its assets had fallen by 18% from £57.8m in 2008 to £47.3m, but this compares to an overall fall in the FTSE of 32% for the same period. Its share price during the year fell from 195p to 90p but has since gained ground back to 135p last night.

The value of Northern Investors’ liquid assets rose to £14.8m as a result of its exits from three companies, which included the sale of its stake in the Stainton Metal Company, a Stockton-based manufacturer of street lighting columns, masts and telecommunication poles, in 2002.

Peter Haigh, chairman of Northern Investors, said: “The operating environment for small and medium-sized businesses in the UK has been extremely challenging and there is no compelling reason to believe that there will be a significant improvement in the near future, with the recession now firmly established. “Against this background our company has inevitably felt some adverse effects, but the investment portfolio has demonstrated a measure of resilience and your board believes that the company is in a good position to move forward when market conditions improve.

“The past year has seen a strong inflow of cash from successful investment realisations which will enable us to take advantage of new opportunities at the appropriate time.”

NVM currently manages five private equity funds, including Northern Investors, with stakes in over 32 co mpanies.The firm has offices in Newcastle, Edinburgh and Reading and focuses on investments of between £1m and £10m in growing companies.