GVA Grimley has sold 26% of its business to Lloyds TSB’s private equity arm to fund future acquisitions.
Grimley has secured £40m funding from Lloyds TSB Development Capital (LDC) and has converted from a limited liability partnership to a limited company.
Grimley will be able to use capital from LDC to buy smaller businesses. The new structure will also enable Grimley to float, which could happen in the next three years.
It will broaden ownership of the firm, enabling its 165 non-equity partners to buy a stake in addition to the 71 equity partners.
Bob Barnett, chief executive of Grimley, said: ‘We are the first partnership to do this. There will be a change of culture but this route allows more staff to profit.’
LDC has completed more than 400 transactions in the UK and has a £2.2bn portfolio. Unlike some other private equity firms, which squeeze businesses to make a profit and then exit within three years, LDC has a 10-year investment plan for Grimley. It cannot sell its stake in the business without board approval.
They will join a seven-strong board. Grimley’s executive – comprising Barnett, managing director Malcolm Whetstone and finance director Donald Smith – will continue to run the business .
Barnett believes the slowdown in the market and the credit crunch will mean some firms will want to sell their businesses next year at more realistic prices, and that Grimley will be able to take advantage of this.
‘We have bought businesses up to £5m,’ said Barnett.
‘But as a partnership it is difficult to raise funds to buy anything bigger than this. Now with this investment we can compete with our listed peer group.
‘Our growth plans are for London and the south-east in planning, building, consultancy and valuation, which is where our business is already. London is still the most valuable area of the country.’
Grimley has around 50% of its business in London with around 70% of its business in consultancy and advisory in building, planning, valuation and project management.