Ignite Growth (Ignite), a UK-based investor focused on supporting the growth of ambitious, fast growing companies, has acquired Newcastle Tool & Gauge Ltd (NTG), as the first stage in a buy and build growth strategy.
Financial terms of the transaction, which is Ignite’s second buy and build platform investment, have not been disclosed.
Founded in 1979, NTG is a precision engineering business based in Gateshead. It manufactures low volume, high value parts for use in Severe Duty Engineering Applications, where its products operate in high temperature, high pressure or high stress environments.
Prior to Ignite’s investment, NTG had three shareholders, Brian Bates, Joan Graham and Charlie Sampy who have owned and managed the business since 2008. Ignite’s investment provides a retirement solution for Bates and Graham. Sampy remains a shareholder, Director and a key member of the management team as Head of Operations. Ignite has sourced an industry-leading team to work with Sampy and build on NTG’s impressive reputation. All other employees and members of the team will remain in place and continue to manage the business.
NTG’s incoming management team are Mike Hutchinson, MD, and Dr Douglas Dawson, Chairman. They are both highly experienced managers of engineering businesses. Hutchinson was previously General Manager of Spincraft ETG, a Newcastle-based precision engineering business making specialist metal forming products. Dawson is CEO of Liberty Industries Group, the USD2 billion engineering division of Gupta Family Alliance a privately owned global industrial business with USD20 billion revenues.
Ignite will work closely with management to build the business both organically through ongoing investment in staff, culture and plant and machinery as well as through a “buy and build” strategy. The acquisition of NTG is the first step on building a substantial business in the precision engineering sector. There are over 2,000 precision engineering businesses in the UK (source: IBIS) many of which are owned by managers looking to retire over the next 5 years. Ignite is looking to acquire businesses which can extend NTG’s footprint into new end markets and capabilities. The funding for the acquisition programme has already been secured.
Andrew Leek, Partner at Ignite Growth, says: “NTG is a clear leader in its field and is well-positioned for future growth in a sector that is clearly positioned for consolidation. We were impressed by NTG’s reputation amongst its customers, the long term investment that Charlie and his fellow directors made in the factory and the commitment to the team of skilled machinists. We think the precision engineering sector will respond positively to a buy & build strategy and will be working with the senior management team to grow NTG both organically and through acquisitions.”
Hutchinson says: “Douglas and I are thrilled to be joining NTG at such an exciting time in its development. The business has shown incredible resilience through the Covid-19 pandemic. We look forward to working with Ignite to build a business development capability that will match the exceptional quality that NTG produces and to bringing NTG’s to a wider audience across the UK.”
Charlie Sampy, Director – Head of Operations, shareholder and former MD at Newcastle Tool & Gauge, says: “Ignite were straightforward and easy to work with and they have allowed Brian, Joan and me to achieve our aspirations whilst putting together a management team who understand us and our culture and can help take the business forward. The business is in good hands and I am very excited about the future for NTG.”
Debt for the investment was provided by Arbuthnot Bank Ltd who provided both cash flow and asset based financing. Ignite was advised by Trowers & Hamlins (legal advisors), KPMG (financial advisors), Dow Schofield Watts (financial due diligence), Tax Advisory Partnership (tax due diligence), Armstrong Transaction Services (commercial due diligence). Vendors were advised by Clive Owen (corporate finance) and Ward Hadaway (legal advisors). Management was advised by Consilium (legal advisors).