TM Group in secondary buyout

Bank of Scotland Corporate has provided a £165m integrated debt and equity package to support the existing management in the secondary buyout of TM Group Limited. The transaction provides an exit for Montagu Private Equity Ltd and Electra Partners Ltd, which acquired the business in 1995. the return on the deal was undisclosed. Management and employees have rolled over a significant proportion of their equity, and will hold the majority of the equity in the new vehicle with Bank of Scotland taking a minority stake.

The business raised a total of £248m under Montagu and Electra’s ownership. HSBC Private Equity (now Montagu) first invested in TM Group in 1995 when, together with Electra Fleming, it backed the management buyout of what was then the retail division of Gallagher plc.

In early 1998, the company underwent a complete re-financing of TM Group via a £160m sterling and US dollar high yield bond. This was a groundbreaking transaction at the time, representing the first substantial recapitalisation for a financial investor via the high yield bond market. In November 1998, HSBC Private Equity provided follow-on equity to support the £75m acquisition of Martin Retail Group (MRG) from a consortium of banks.

In 1999 TM Group won the Large Management Buyout of the Year Award, sponsored by the Financial Times and the British Venture Capital Association, in recognition of its achievements.