ECI invests £12 million in Stewart Group in deal valuing it at £17 million

ECI, the leading UK mid-market private equity specialist, has today invested £12 million in Croydon-based Stewart Group Holdings Ltd (“Stewart”) in a BIMBO (buy-in / management buyout) deal that values the business at £17 million.

Stewart is the UK market leader in the manufacture and supply of technical plastic moulded products for the gardening, home, professional catering and medical storage sectors. The company offers a large range of products in its portfolio ranging from garden planters and propagators, to food containers and specialist storage products for medical applications. The company employs 75 people in Croydon and enjoyed a turnover in 2010 of £15 million.

Richard Butler, who joins as the Group CEO, brings significant knowledge of the advanced technical plastics sector from working for leading manufacturers in the aerospace and automotive sector.

Lee Mowle, the current owner and CEO, will remain with the business as Managing Director of the gardening and catering divisions and retains a substantial shareholding in the company.

Three other senior managers within Stewart are also becoming shareholders in the business as part of the transaction. Ken Lindsay and Eleanor Blagbrough led the transaction for ECI, and Ken will join the Board following completion.

Stewart is a very long-established UK manufacturing business. Its clients include the major DIY stores such as Homebase, homeware stores including Wilkinson, wholesalers such as Booker, and more than 600 independent garden centres, with Dobbies among its clients. Stewart also works with a number of specialist catering distributors. Most people will find they have a Stewart Plastics product somewhere in their home, either in the garden or in the kitchen.

First incorporated in 1945, Stewart has a long and chequered history. Listed on the London Stock Exchange in the 1960s, it was acquired by Bunzl in 1985 and underwent its first buyout in 1999.

Having seen the business deteriorate and become loss-making, Lee Mowle, the current owner, acquired it with a partner in 2003 and became CEO, taking full ownership in 2008. During this time, Lee reversed the company’s declining fortunes, generating strong growth through a focus on new product innovation and outstanding customer service.

Despite the recession, the company has grown strongly on the back of positive consumer demand for gardening products. Its success is driven by trends including an ageing population which has more time to garden, an increasing culture of ‘grow your own’, healthy and organic eating, and growing interest in gardening as a leisure pastime.

With ECI’s investment, the business plans to accelerate its already successful product innovation strategy, and will pursue targeted acquisitions of complementary product businesses in its existing core markets. It will also use Richard Butler’s experience to expand into new markets which can benefit from its unusually strong and wide technical capabilities.

Ken Lindsay of ECI commented:
”This investment offers ECI the opportunity to be involved with an excellent team running a market-leading company with a strong reputation, a well respected brand and excellent customer relationships. Lee has already done a great job developing the company to where it is today, and we are delighted to back him to accelerate the business further. Richard Butler brings new skills and experience to the business and will be key to driving its expansion into new markets.

“Stewart is exactly the kind of business that ECI’s manufacturing team likes to back. It is a good, old fashioned, British manufacturing company that has moved with the times and developed a strong position in an attractive market, as well as earning strong customer loyalty. It has done that by focussing on making good quality and innovative products, and delivering them to the customer at an attractive price point. It has great potential to continue to grow and develop further. We look forward to working with Richard and Lee to help it do so.”

Richard Butler, CEO of Stewart Group Holdings commented:
“Gardening and catering are solidly growing markets, driven by a number of long term trends including aging demographics, more leisure time and an increasing focus on healthy eating. Stewart has reflected this by prospering through the recession, and the business is well positioned in its existing markets to continue to grow strongly.

“Whilst Stewart’s products appear superficially simple, they are technically highly complex to manufacture. The company has an unparalleled range of technical capabilities which it can use to expand its mastery of advanced, technical plastics into new market sectors.”

Lee Mowle, MD of Stewart Gardening & Catering commented:

“At Stewart, we have worked hard and successfully for the last eight years, first to turn round the business and return it to growth. We now see lots of new opportunities for the business opening up in both our existing and new markets, and I am delighted to bring in ECI and Richard as partners to help us do so.”

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For further information please contact:

Equus Group (for ECI Partners)
Piers Hooper / Sam Barton +44 (0)20 7223 1100
Sam.Barton@equusgroup.co.uk

Stewart Group
Sara Tye +44 07786 176 617
Sara@redheadPR.co.uk

Financial, Legal and Commercial Advisors:
BDO, corporate finance advisor to ECI.
KPMG, Newton, Tyler Mangan and Grant Thornton, due diligence advisors to ECI.
Cameron Barney, advised the shareholders and introduced the transaction to ECI.
SJ Berwin, legal advice to ECI.
ASB-Law, legal advisor to the vendors.
Eversheds, legal advisor to the new CEO.
Cavendish, advised the vendors.
Baker Tilly, taxation advisor to the company and the vendors.
CIL, commercial due diligence advisor to ECI.
Heath Lambert, insurance due diligence advisor to ECI.
RPS Group, environmental due diligence advisor to ECI.

NOTES TO EDITORS

ECI Partners (www.ecipartners.com)
Originally founded in 1976, ECI is one of the longest established private equity groups in the UK. With offices in Manchester and London, and a team of 21 dedicated professionals, ECI specialises in buy-outs, buy-ins and development capital deals of £10 million to £150 million.
ECI is owned by its team and manages private equity funds with a capital base of over £880 Million. It has provided funding to over 250 companies.

In December 2008, ECI raised ECI 9, ECI’s ninth buyout fund and £437m in size. This fundraising process exceeded the original £400 million target in just three months, with over 90% of the capital being committed by existing ECI investors.

ECI has a strong track record of successfully backing high-growth companies. These have included Tragus (the Café Rouge and Bella Pasta restaurant chains), Hoseasons, Bargain Booze, NCC, and Laterooms.com. As one of the last private equity firms still to have a dedicated manufacturing team, ECI has been a long-standing investor in the UK manufacturing sector with investments including Kelvin Hughes, Racal Acoustics, DLP, Nuaire, Premier Bathrooms and Williams Holdings (where Sir Nigel Rudd and Brian McGowan made their names).

This is ECI’s fifth deal in eight months (the others being CarTrawler, XLN, Reed & Mackay and Fourth Hospitality) with total enterprise value of c£300m and equity invested by ECI of nearly £140m.

Stewart Group

• Stewart is over 65 years old and has been producing injection and rotationally moulded products since 1945.
• The company has three divisions: catering, gardening and packaging.
• Each division is BS ISO 9001-2000 accredited and operates from the manufacturing, warehousing and distribution centre in Croydon, Surrey.
• Stewart has worked closely with the Carbon Trust to find ways to save energy across its manufacturing processes. Through this cooperation, investments in new technology have increased Stewart’s competitiveness and reduced its carbon emissions – achievements that the Carbon Trust showcased in a case study about energy savings in British manufacturing.
• Garden products include
• Bio flower pots
• Growing products
• Propagators
• Outdoor pots
• Garden accessories
• Watering products
• Water butts and accessories
• Troughs and planters
• Self watering troughs
• Decorative planters.
• Gardening products are available in Homebase, Garden Centre Group, Wilkinsons, Dobbies and Klondyke/Strikes Garden Centre group and over 600 independent Garden Centres in the UK and Eire.
• Stewart is a member of:
• GIMA – the Garden Industry Manufacturers Association
• Gardenex – the Federation of Garden and Leisure Manufacturers Limited, and
• HTA – the Horticultural Trades Association.
• Professional Catering provides a range of food storage and preparation, serving and display products for the catering industry.
• The catering range is sold through specialist wholesalers to the catering and licensed trade as well as cash and carry outlets.
• For further information on Stewart visit www.stewartcompany.co.uk, email info@stewartcompany.co.uk or call Customer Services on 0208 603 5700.
• For more information about Stewart’s professional catering ranges visit www.stewartprocatering.co.uk.
• For more information on packaging solutions visit www.stewart-solutions.co.uk

For more information, contact redheadPR:
Sara Tye +44 07786 176 617 or Emma De Maio on +44 07921 160 134
Email sara@redheadpr.co.uk or emma@redheadpr.co.uk