US-based private equity firm Bain Capital said it bought the stakes of 3i and LDC in Hull-based MKM Building Supplies, the UK’s largest independent builders’ merchant.
MKM had revenue in excess of £284 million in 2016 and employs 1,100 people.
MKM management will retain a significant shareholding in the business.
3i’s 2006 investment, partially syndicated to LDC, supported MKM founder David Kilburn with the firm’s growth plans.
Since 2006, MKM revenues and profits more than trebled and the business has developed from a regional to a national player, expanding to 47 branches across the UK.
Kilburn, MKM’s executive chairman, said: “MKM has enjoyed exceptional growth over the past 21 years and I would like to thank 3i and LDC for their long-term backing and support.
“We are looking forward to working with Bain Capital for the next stage in MKM’s development.
“The UK builders’ merchant market is anticipated to grow to £13 billion by 2020 and we expect to expand our UK branch network significantly.”
Matthias Boyer Chammard, principal, Bain Capital Private Equity, said: “We were attracted to MKM’s best-in-class customer service, underpinned by its unique business model, which has enabled the firm to significantly outperform the market.
“Bain Capital has a strong track record of applying its expertise in the building materials and construction sectors to successfully grow companies, including Ibstock in the UK.
“We are delighted to have the opportunity to partner with the MKM management team to further expand the business throughout the UK.”
Jonathan Crane, director, 3i Private Equity, said: “David’s leadership and MKM’s unique business model have driven impressive financial performance and a long-term track record of growth.
“We are proud to have supported David and the company during this period of transformation and wish them all the best with their exciting future expansion plans.”
Bain Capital said proceeds to 3i from the transaction would be £70 million.
The transaction is subject to regulatory approvals and is expected to close by May 2017.
Rothschild acted as lead adviser to selling shareholders alongside Addleshaw Goddard as legal adviser, and PwC and OC&C who provided vendor due diligence assistance.
Moelis & Company and PwC advised Bain Capital, with Ropes & Gray as legal adviser.
