Here we feature the latest equity investments into Welsh firms to support expansion plans, as well as how companies have used previous investment rounds to execute growth.
Just Love Food Company
Mike Woods has completed the management buyout of the food company he set up in 2009 after two of his children were diagnosed with severe nut allergies
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Eleven years on, Caerphilly-based Just Love Food Company provides nut-free, vegan, gluten and milk-free cakes to the big four supermarkets in Tesco, Asda, Sainsbury’s, and Morrisons. The company – which has a turnover of £3.8m and employs 70 people – has recently launched a caterpillar cake called Archie which is suitable for vegans.
With a £750,000 loan and equity funding package provided by the Development Bank of Wales, Mr Woods 56, has been able to buyout existing shareholders and take back control of his company, with the Development Bank taking a 30% equity stake.
Managing director Mr Woods has been joined by three new private investors with a combined equity stake of 22% stake. George Adams, Chris Smith and Tom Carroll, bring with them a wealth of experience – with Mr Smith and Mr Adams previously being managing director and chairman respectively of Marshfield Bakery. Mr Carroll is a former chief operating officer at Unilever.
The board will be chaired by Mr Adams, who is currently chair of Rave Coffee and Banner, a school uniform business. He said: “Our vision is to be the most trusted, innovative and inclusive celebration cake brand with a business that benefits our team, customers and the community. Mike’s original insight, born out of personal experience coupled with the support of the Development Bank of Wales, means that we have all the ingredients necessary for the next stage of the journey. It’s a recipe for success.”
After finding it frustrating not being able to bring cakes home for his young family, in 2009 Mr Woods used his skills and experience of working in the food industry to change things – producing the first celebration cakes on supermarket shelves in the 海角视频 to clearly state they were nut-free in 2010.
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Explaining the inspiration behind his business, Mr Woods said: “When my daughter Danika was first diagnosed with a severe nut allergy at four years old, times were different. There was a lot of ignorance and less awareness about allergies, and it was difficult. As a family we were all tested, and six months later, we found out that my son Rourke had the same reaction.”
“Over time, I started receiving letters from parents across the country asking us to produce gluten-free and dairy-free cakes for their children,” said Mike. “Having watched Danika being excluded from other children’s birthday parties because of her nut allergy, it was important to me to produce more cakes that included everyone, so we began adding to our range.”
The family-run business – including daughter Danika who works as marketing manager – is now looking forward to a bright future.
Mr Woods, who was introduced to the Development Bank by Frank Holmes at Gambit Corporate Finance, said: “The combined support of Gambit and the Development Bank has been instrumental as we focus on restructuring the business. We’ve got an exciting future. The mix of equity and loan from the Development Bank of Wales means that we’ve got ongoing support and counsel, as well as the working capital to deliver our vision to be the most inclusive celebration cake brand.”
The £25m Wales Management Succession Fund is financed by the Welsh Government and Clwyd Pension Fund. Loans and equity investments between £500,000 and £3m are available for management teams seeking to own and run their business with terms range between one and seven years.
Senior Investment executive Steve Galvin and Investment Executive Ruby Harcombe completed the deal for the Development Bank.
Mr Harcombe said: “Just Love Food Company is a pioneering manufacturer of dietary and lifestyle-specific products with an excellent shelf-presence with the leading supermarkets. As developers of first-to-market celebration cakes, they’re meeting the requirements of the modern consumer at a time when we are all increasingly conscious of nutrition and healthy living.
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“Mike and the team have got some really exciting growth plans that we’ll be facilitating with the mix of funding that we have provided from our Wales Management Succession Fund. We’re looking forward to working alongside the team and our co-investors as industry specialists.”
Berry Smith acted for Just Love Food Company and Blake Morgan for the Development Bank of Wales.
Mesoa for Men
Mens' skin care start-up venture Mesoa for Men has completed a six-figure fundraising round.
The Cardiff-based firm, founded by its chief executive Matt Jones last year, were advised on the round by corporate finance led deal-making business the GS Verde Group.
The investment, raised from private investors, will see the business push on with its plans to create new jobs, by growing the team to 15 employees by early next year. .
Mr Jones, who founded media agency S3 Advertising said: “It is an exciting time for Mesoa for Men. We are proud to have been so well received by the investment community, and it comes at a perfect time with the business gearing up to launch our new product ranges this summer. We are excited to be creating new jobs and growing our team to support our growth plans.”
As well as advising on the investment, the GS Verde Group joins a number of private investors in supporting the growth of Mesoa for Men by becoming an equity investor itself.
Nigel Greenaway, chief executive of the GS Verde Group, said: “As a disruptive business ourselves, we appreciate what Matt has achieved already in business and had little hesitation in supporting his next venture. As experienced dealmakers, the GS Verde Group works with some of the region’s most exciting business Founders and we are looking forward to seeing MESOA for Men grow.”
GLUU
A North Wales online learning venture for schools is poised for accelerated growth following a £700,000 investment.
Development Bank of Wales and Tata Steel subsidiary 海角视频SE have invested £490,000 and £210,000 respectively in Wrexham-based GLUU, which is aiming to create up to 20 jobs in the next three years.
The investments are part equity and part loan. In the next three years GLUU is planning to take on some 15-20 staff, who will be Wrexham-based. The aim will be, where possible, to retrain people from industries that have declined in the area and re-employ them in a fresh career.
The firm’s managing director, Sean Gardner, said: “Online learning was already important in schools before Covid and has been accelerated by the pandemic
Our approach is to form partnerships with big brands such as Hodder Education, Smart Technologies, Britannica Digital Learning and Shireland. These then provide the platform to scale-up our offering both in the 海角视频 and internationally.”
The deal was structured on behalf of the Development Bank by investment executive Chris Hayward. He said: “GLUU is not only supporting children’s educational needs, but their mental and emotional well-being. It’s clear to see why they’re on such a positive growth trajectory with a strong product and management team. We are seeing more businesses choose a mixture of debt and equity to help their expansion plans and we’re delighted to partner with 海角视频SE and support GLUU with our equity investment. We look forward to working with them and our co-investors, over the coming years.”
Martin Palmer, 海角视频SE investment executive, said: ”We are delighted to support GLUU with this investment, working in conjunction with Development Bank. The firm is an innovator in a sector which is certain to grow in importance.
“It is encouraging to see that new jobs will be created and that the business plans to take on people from the local area and retrain them in new skills. We wish them every success.”
ALS People
Caerphilly-based recruitment firm ALS People has seen rapid expansion through the pandemic due to strong demand for recruiting frontline key workers.
However, its chief executive Steve Lanigan, 38, would have walked away from the business without loan and equity funding from the Development Bank of Wales in 2018.
Three years later he runs a £60m turnover venture and recently bought back a 20% stake
Mr Lanigan said: “When I first joined the company in August 2014, I was a minority shareholder. As the business grew, so did my ambition. I wanted an opportunity to do something for my family. So, in January 2018, I had a conversation with the other shareholders about a buyout. I approached the Development Bank of Wales around three months later as I wanted to have an equity partner onboard, one that would allow us to transform.
“In August 2018, a £1.1m finance package was finalised, with the Development Bank of Wales providing £625,000 – a combination of debt and equity.
“This allowed me to take control and shape the business, and two months later, we won a Fast Growth 50 award which raised our profile and helped us win large contracts. Without investment from the Development Bank of Wales, I’d have left the company. But their help has meant I have had the space to make the right decisions. Last year, we approached the Development Bank of Wales and the other minority shareholder about an equity buyback – and both deals completed in February. As a business, we have been fortunate that the sectors that ALS People has served during the pandemic have been buoyant. Over the last 12 months, we’ve trebled our revenues from £23m to over £60m.
" But I’m aware of how businesses have suffered substantial losses during the pandemic – and I hope my story encourages more aspiring entrepreneurs to realise their own dreams.”
1st Choice Accident Repair Centre.
Cardiff-based 1st Choice Accident Repair Centre is accelerate its business plans.
The accident repair workshop, completed a £2.1m management buyout, with £1.1m investment from the Development Bank of Wales in 2018.
The investment – which also saw Mervyn Ham of Iridium taking an equity stake in the business – enabled directors Michael Summers, Calum Young and Sion Coughlin to purchase the £3m business.
Since the deal, the business has cemented its position as a leading accident repair centre in Wales. With development bank support the business is moving to a much bigger site later this year so they can continue to diversify into new service areas.
Bethan Cousins, new business director for the Development Bank of Wales said: “This is a great example of where our succession finance really can make a difference. Vendor initiated management buy-outs are a very popular means of ensuring business continuity and opportunity for management teams. It is also often the quickest route for deals to complete with flexible loans and equity available that can be tailored to meet specific requirements.
“The team at 1st Choice have built up a very successful brand. This is a long established, profitable trading business with a senior management team who have been ready for this move for some time. We wish them every success.”est