Close Brothers Private Equity Leads Funding for £30m MBO of UK’s leading manufacturer of stair edgings and floor accessories

“CBPE seeing strong current appetite for mid-market deals”


CBPE announces the management buy out of Gradus Limited (“Gradus”), the UK’s leading manufacturer of stair edgings and floor accessories, from Headlam PLC in a deal which values Gradus at £30 m. CBPE is investing £11 million.

Gradus is the UK market leader in the manufacture of stair edgings and floor accessories with over 70% market share and exceptional service, (99.2% delivery to promise performance). In addition, Gradus operates a carpet division, a fabrics division and décor lighting to cinema chains.

The carpets business has grown strongly by building a “contract collection” business with an excellent service culture targeted at distributors and smaller contractors focussed upon refurbishment work. This overlies its ‘core polypropylene” carpets business which offers high durability carpets and benefits from strong market share in the healthcare and university sectors.

Gradus has an experienced management team led by Managing Director Steve Watt. The business has significant exposure to the public sector and has proven to be resilient in difficult economic times.

Gradus reported turnover in the year to December 2000 of £34.5 million and reported earnings before interest and tax of £4.3 million.

Senior debt financing for the transaction has been provided by Barclays and NM Rothschild.

Gradus employs a total of 322 people, the majority of whom are based at Macclesfield, where the company is the second largest local employer. The company’s décor division is based in Staines, Middlesex.

Commenting on the MBO Steve Watt, Managing Director of Gradus, said:
"We are delighted to be working with Close Brothers Private Equity and have really welcomed their level headed approach to doing business, particularly in the light of recent events. The MBO greatly enhances the opportunity for us to build on our leading position in our markets and to develop the new wall protection and matting markets which we have entered over the past 18 months and where we are already seeing significant opportunities for growth.”

Sean Dinnen, Partner of CBPE, who will join the board of Gradus, added:
"Gradus has the makings of a cracking investment for us – a leading position in its markets, scope for growth and a resilient business model which benefits from significant public sector exposure.”

This press release has been issued by Close Brothers Private Equity Limited. Close Brothers Private Equity Limited is regulated by the FSA.

The above information is not to be regarded as an offer to sell, or a solicitation of an offer to buy any security. Where information has been obtained from outside sources, it is believed to be reliable, but is not represented to be accurate or complete.