Palatine invests in Forrest as LDC reduces stake

Palatine Private Equity has invested £16m for a minority shareholding in social housing contractor Forrest as part of a deal which sees LDC sell some of its stake.

LDC says it has achieved a return of 2.4 times its initial investment, which is undisclosed

Palatine and LDA now have a combined majority stake in the Bolton-based business, which provides refurbishment and responsive maintenance services to the social housing market in the North of England.

The company works with major social housing clients including Bolton at Home, City West Housing Trust, Salix Homes and Blackpool Coastal Homes.

While the company predominantly works in the North West it also has clients in Yorkshire, the North East and the South West of England.

Over the last three years, Forrest has also established a renewables division, becoming one of the first registered installers under the Government's Green Deal and Energy Company Obligation initiatives.

Forrest is led by chief executive Lee McCarren and managing director Mark Lyons. Palatine managing partner Gary Tipper, partner Ed Fazakerley and investment manager James Winterbottom worked on the deal.

Tipper and Fazakerley will join the Forrest board as non-executive directors. Bob Holt, chairman of social housing company Mears Group plc, will become non-executive chairman. Current chairman Robert Morgan will leave the business.

Since LDC backed the company in 2007, Forrest has seen its turnover grow from £38m to over £100m.

Lee McCarren, chief executive officer, Forrest, said: "LDC, led by Jonathan Bell, have been a hugely supportive partner for the business over the past six years.

"With Palatine alongside us as an additional investor, we can continue to drive improvements in the quality of our customer service offering, as well as developing more new and complementary service lines. This on-going strategy has been the key to our many consecutive years' growth and to our strong, long-term customer relationships."

A team at Deloitte, led by partner Paul Trickett, advised LDC and management, on the deal, while Manchester-based Partner Jodi Birkett provided financial due diligence. David Crout at PMSI Consulting provided commercial due diligence. Dave Foreman, a partner at Praetura Capital provided banking and financial services.

Tony Dean and James Adam at RBS, and Chris Thomas and Paul Wickers at Santander, provided senior debt and working capital facilities of £26m to support the transaction.

LDC and management received legal support from DWF's Jonathan Robinson and Darren Ormsby, while Rebecca Grisewood of Gateley advised Palatine. Richard Oman of Addleshaw Goddard advised the banks. Management due diligence was carried out by the Quinn Partnership with Marsh carrying out insurance due diligence.