Property developer and consultancy GVA Grimley has secured GBP40m funding from Lloyds TSB Development Capital and has converted from a limited liability partnership to a limited company.
Property developer and consultancy GVA Grimley has secured GBP40m funding from Lloyds TSB Development Capital and has converted from a limited liability partnership to a limited company.
Grimley will be able to use capital from LDC to buy smaller businesses, and its new structure will enable the company to float, which could happen in the next three years. The deal will also will broaden ownership of the firm, enabling its 165 non-equity partners to buy a stake in addition to the 71 equity partners.
‘We are the first partnership to do this,’ says Grimley chief executive Bob Barnett. ‘There will be a change of culture but this route allows more staff to profit.’
Lloyds TSB Development Capital, which has completed more than 400 transactions in the UK and has a GBP2.2bn portfolio, says that unlike some other private equity firms that seek to exit from portfolio companies within three years, it has a 10-year investment plan for Grimley and cannot sell its stake in the business without board approval.
‘The opportunity to invest in a business of this quality does not come along very often,’ says Tim Farazmand, managing director of Lloyds TSB Development Capital in London. ‘GVA Grimley has a strong consulting base coupled with vibrant investment and transactional teams and we are delighted to be supporting it in its next growth phase.
‘The firm has an outstanding reputation with its clients, the profile of which is second to none, a strong track record of profitable growth and an experienced and successful management team, supported by the massive strength in depth of a 236 partner firm.’
A Lloyds TSB representative will join a seven-strong board that includes Barnett, Grimley managing director Malcolm Whetstone and finance director Donald Smith, who will continue to run the business.
Barnett believes the slowdown in the market and the credit crunch will mean some firms will want to sell their businesses next year at more realistic prices, and that Grimley will be able to take advantage of this.
‘We have bought businesses worth up to GBP5m, but as a partnership it is difficult to raise funds to buy anything bigger than this,’ Barnett says. ‘Now with this investment we can compete with our listed peer group.
‘Our growth plans are for London and the south-east in planning, building, consultancy and valuation, which is where our business is already. London is still the most valuable area of the country.’
In the financial year ending on April 30, GVA Grimley generated total revenues of GBP148m, of which 67 per cent was derived from consultancy services and around 50 per cent was generated by the regional offices outside London.
