July 26, 2011
Endless sources another £220m for investing across the region
Turnaround specialist on lookout for opportunity
Endless, the turnaround fund which invests in struggling companies has secured £220m in 10 weeks to invest in businesses across the region.
The Leeds-based firm, whose previous investments include Peter Black International and Davy Markham, secured 15 investors from the United States, Europe and the UK, including pension funds, US universities and family offices for its third fund.
It now manages more than £500m which it will invest into UK-headquartered companies which require operational turnaround, financial restructuring and performance improvement.
Partner Darren Forshaw said: “Yorkshire provided the bulk of the transactions through funds one and two and we expect that to continue through fund three.”
He added there were currently opportunities across a range of business sectors. “There is a fair amount of retail but there is a real mix. Anything that has a discretionary consumer spend is starting to feel the pinch at the moment,” He said.
Endless, which employs 25 staff, including 18 in Yorkshire, has invested into 35 businesses since inception in 2005, making it one of the most prolific turnaround investors in the UK in the past five years.
The firm is headquartered in Leeds but also has offices in London, Manchester and Birmingham.
A number of its biggest successes have been in Yorkshire, including Peter Black International, Davy Markham and Vasanta Group.
Endless backed a management buyout of Peter Black, the Keighley-based £223m turnover firm led by chairman Gordan Black and chief executive Stephen Lister in 2006. It sold the firm in 2007 to Chinese trading firm Li & Fung, which resulted in more than £50m of equity value being generated in just over a year.
Mar Forshaw said: “Peter Black was the deal that put us on the map. To buy such a business after only six months caught a lot of people’s attention and then to sell it for such a big capital gain a year later got us national as well as regional coverage and also helped us raise fund two.”
He added: “Equally valuable was Davy Markham, which was on the verge of going into administration, and we turned it around into a fabulous business.”
While investors have scored big returns on a number of deals, other investments have not been as successful.
Mr Forshaw said the firm’s first ever deal – a £13m investment in window and door manufacturer Speed Frame- was the most disappointing. “We managed to turn around a £4m loss into a £3m profit and then 2008 came, when everything stopped, consumer confidence was in crisis and that effectively led to that business collapsing.”
Earlier this year, Endless also conceded defeat with T J Hughes, which went into administration just four months after it bought the struggling business from private equity firm Silverfleet Capital.
“When we bought it, it was on the verge of going into administration,” Mr Forshaw said. “We took the view of ‘let’s have a go and put some working capital into there’ but unfortunately we couldn’t save it-the business was too damaged.”
The turnaround market is showing signs of slowing down, according to Mr Forshaw. “Interest rates are still very low and banks remain supportive so were tending to find not many things coming to the market but in the medium term, over the next two years, we expect to busy,” he said.
He added that investors were attracted to the firm’s third fund because of the anticipated returns that could be generated. “We are told by our investors that we are one of the best performing funds in Europe,” he said.
Managing Partner Garry Wilson said: “Endless Funds I and II have delivered top decile returns and this, together with the significant investment directly from the Endless partners and team, provides great confidence to our existing and new investors. The demand for our third fund amazed us and we were disappointed that we could not accommodate some of the blue chip investors who wanted to join us. An increase on our last fund size of 33 per cent will enable us to help even more companies all over the UK in the next few years as economic conditions remain difficult.”
Mr Forshaw added: “ Our two current funds have now brought nearly £400m of external investment to be managed out of the region and this gives us the financial capability to continue to support local Yorkshire businesses as well as grow our own team.
“Acquiring loss making, distressed businesses is tough and we are proud that our investments to date have secured the future for more than 10,000 jobs.”
Endless was advised by Duncan Woollard, of SJ Berwin, and Simon Hardcastle of Walker Morris.