Warburg takes bite out of Premier

US private equity giant Warburg Pincus has committed £64m to Britain’s largest food manufacturer Premier Foods for a 10% stake in the food company.

It comes at time when the food giant responsible for Hovis bread, Batchelors and Bisto gravy has been granted an extension on its banking covenants. Premier built up a £1.8bn of debt during the acquisition of RHM and Campbell’s Soup.

The rights issue is fully underwritten, and will deliver £379m after fees. Warburg Pincus, which is set to be a long-term investor in the company, has also committed to acquire additional shares, subject to clawback by existing shareholders.

Managing director of Warburg Pincus, Steve Coates said: “We believe that this is a resilient business with strong management and excellent brands. The proposed new capital structure provides the company with a robust platform for growth.”

Warburg has extensive experience in consumer companies having already invested US$3bn in consumer companies since its inception in 1966. More than 20% of the firm’s total positions have been in minority positions in public companies. Some of the firm’s investments include, Loyalty Management UK (Nectar), Mattel and Neiman Marcus.