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Aberdeen Murray Johnstone exits Conveco

Aberdeen Murray Johnstone Private Equity (AMJPE) has sold its 42.8% stake in the Conveco chain of convenience stores to the Co-operative Group (Co-op) for £29.2m.

Co-op, which reportedly beat off bids from rival supermarkets Tesco, Sainsbury, Somerfield, will initially run the chain as a stand alone business before converting the stores to its “Welcome” convenience format. The return on the investment was not disclosed.

AMJPE supported a £17m MBO of Conveco from the Alldays chain in May 2001. AMJPE invested via six client funds in the MBO and had 42.8% of the equity of the business including warrants issued to Credit Agricole which provided £3m of mezzanine finance.

Conveco is a holding company that was set up to acquire three regional development companies (RDCs) from Alldays.

There were 32 RDCs originally, set up by Alldays in conjunction with regionally appointed management teams to fund the acquisition and management of convenience stores. These companies were partly owned by the management team and were provided with acquisition capital by Alldays.

A management team was appointed to develop the roll out in the south west of England which developed into three RDCs called Devon and Cornwall Convenience Stores Limited, Bristol and Somerset Convenience Stores Limited and Plymouth and Cornwall Convenience Stores Limited.

During 2000 Alldays decided to bring the ownership of the RDCs back under the control of the plc. The management team in the south west negotiated to buy the RDCs from Alldays.

Following the AMPJE-backed buyout, the business changed its supplier from Alldays to Nisaway and re-branded itself to trade as Local Plus.

Due to underperformance by the management team, further rounds of investment had to be made and in April 2003 the management team was replaced and further funding was made available to implement a recovery plan which included a change in supplier and a re-branding of the shops under the Spar banner.

The total cost of AMJPE’s investment was £13.6 million, which was split as follows:

Murray VCT plc £1.7 m

Murray VCT 2 plc £2.4 m

Murray VCT 3 plc £2.4 m

Murray VCT 4 plc £2.4 m

Aberdeen Development Capital £3.9 m

Aberdeen City Council Superannuation fund £0.8 m

Conveco is based in Long Ashton near Bristol and is the name behind the Local Plus and Spar chains. It is the largest convenience store operator in the south west of England with 64 outlets and employs over 900 staff. At the time of the buyout it had 53 stores and planned to grow the business to more than 100 by 2006.

New owner the Co-operative Group, which now operates 1,820 shops, acquired Alldays in autumn 2002.