Private equity plays crucial role in the continuing success of North East

Nov 11 2009 by Shawn Bone, The Journal

COMPANY executives and their advisers cannot ignore the importance of private equity to the international and UK economy.

Despite, recent bad press surrounding the lack of transparency in the private equity world and the financial distress of certain private equity companies, what cannot be ignored is the extent to which private equity now affects UK corporate life.

Despite the current financial climate, the private equity industry is still deploying money across many sectors.

So whether it is utilities, pharmacy or healthcare the private equity industry is all around us.

In the North East, private equity, has had, and continues to play an important role in enabling succession, helping businesses invest, expand and support consolidation of markets, to create, leaner more competitive companies, through cultural change and optimisation of operational and financial performance. Whilst private equity can play a key role in enabling succession, other key drivers can stimulate private equity investment too.

Attends Healthcare, a world-class manufacturer of adult incontinence products, based in the North East is part owned by Rutland Partners.

Since the acquisition in 2002, the management team led by local chief executive James Steele has undertaken significant capital investment and brought about radical change in both manufacturing and distribution of the product.

This has enabled improved operating and financial performance. The business had developed further under the new ownership of Rutland Partners and has invested heavily in cap ex to remain at the forefront of its sector.

More recently we have seen the involvement of Inflexion Private Equity at Soil Machine Dynamics, of Newcastle, one of the world's leading specialists in designing and manufacturing remotely-operated subsea vehicles.

Inflexion has taken a majority equity stake working alongside the management team and the Reece family to invest and develop the business.

Finally Quantum Specials is a unique pharmaceutical specials manufacturer' based in the North East.

It has received an investment of £14m of equity from Lloyds Development Capital, the private equity arm of Lloyds Bank.

In this case the buyout provides an exit for corporate shareholder Phoenix Medical Supplies and founding shareholder Andrew Patterson and enables LDC and the remaining management team, led by Ian Edge, to take the business forward.

These are just a few examples of private equity in operation within the region and the involvement of key executives based here in the North East.

We have many more private equity- backed companies in our region and many private equity investors continuing to look for talented managers that can implement bold investment plans and effect change.

Shawn Bone, partner, BTG McInnes Corporate Finance, Newcastle