Adderstone is branching out
Jan 21 2009 by Graeme King, The Journal
ONE of the most high-profile property companies in the North East has taken steps to diversify its business interests as the recession takes hold.
The Adderstone Group, based in Jesmond, Newcastle, has recently followed a policy of investing in young companies operating in sectors complementary to its own core business.
Managing director Ian Baggett has taken stakes of anything between 25% and 60% in a number of North East businesses, and says the policy is a sensible one in uncertain economic times, but is also rewarding in supporting companies requiring investment.
The first investment was in the relaunched Brims Construction, where turnover approached £12m last year, and Adderstone retains a 25% stake.
More recently Adderstone has acquired interests in Kelley’s Landscaping, Morgan’s Plumbing Mechanical Contracting and Tecal Electrical Contracting, all in Newcastle, and mechanical and electrical consulting business Avoca Consulting in Durham.
Adderstone says it has benefited from being involved in some of the less glamorous subsectors within the property industry and had always been aware of the benefits to be gained.
Mr Baggett said: “Never has it been more important for us to continue our deliberate policy of diversification.
“We aim to help our subsidiaries grow as we have over a period of years. There always has to be synergy. We are not acquiring interests in businesses unless we feel we can add significant value.
“We have taken a stake of anywhere between 25% and 60% depending on the company. If it is up and running, the proportion is less, but in a less mature business, we are effectively playing a large part in setting it up, so take a bigger stake.”
The managing director said Adderstone began diversifying its interests long before the recession became a reality, but the policy now makes even more sense.
He said: “It was sensible to diversify but we’ve accelerated the process now as there are not that many development opportunities around.
“The first company we invested in was Brims, which was a strategic decision, but recently, it’s been a reaction to what is going on.”
