Gresham devours pasty company

Gresham Private Equity, a UK lower mid-market private equity firm, has purchased food retailer West Cornwall Pasty Company and toothpaste manufacturer Betts Global Ltd.

No price was disclosed for the West Cornwall Pasty Company transaction, for which Lloyds TSB Corporate Markets provided debt financing, but the deal is understood to have been in the range of £30m to £40m.

Gresham will complement the current management team with the appointment of Paul Twamley, who has previous private equity and venture capital portfolio company management experience, as chairman.

Christian Bruning, a partner in the London office of Gresham, said that the firm faced competition from a “limited” number of financial investors in the auction, but no trade buyers, saying: “A new management team effectively joined the company a year ago, with a new chief executive earlier this year, and they agreed a deal with the shareholders to do a buyout and then we were introduced to them, alongside some other private equity houses, in a limited auction.”

Bruning has been responsible for Gresham’s other food retail investments, Individual Restaurant Company and Town Centre Restaurants. Bruning also oversaw Gresham’s investment in frozen food distributor Cooltrader, bought in 2004 and sold last year.

“In the auction process, having an experience and understanding of the sector was very helpful,” said Bruning, who along with Gresham partner Neil Scragg will join WCPCo’s board. “We had plenty of experience of rolling out a food retailing business, so they latched on to our experience.”

The equity package will enable West Cornwall Pasty Company to open about 50 more sites across the UK, with the potential to make acquisitions, with some “possible targeted opportunities overseas, but the business has more than enough to go for in the UK”.

In the same week, Gresham also acquired global toothpaste manufacturer Betts Global Ltd in a secondary buyout from pan-European LBO giant Permira, Royal Bank of Scotland and Bank of Scotland.

Gresham paid £35m in equity, with £75m of debt facilities from CIT Corporate Finance. As part of the transaction, Gresham has appointed Paul Bateman, formerly group operations director for Boots, as chairman of Betts.

Permira acquired Betts (known at the time as Courtaulds Packaging, a subsidiary of Azko Nobel) for £82m in 1998. The London-based private equity firm is understood to have unsuccessfully put the business up for sale in 2005 with a price tag of £100m.

Permira declined to comment on the sale, but according to a source, the firm made an overall loss on its investment in Betts, but not as great as the “tens of millions” reported in various broadsheets.

Bruning noted that it was relatively unusual for a firm of Gresham’s size to be buying an asset from Permira – normally it would be the other way around as part of moving a business “to the next stage” – but said that the Betts investment was a legacy of how Permira has developed from a mid-market firm to an LBO giant over the last nine years.

Both the West Cornwall Pasty Co and Betts investments were made through Gresham IV, a £340m fund raised last June.