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Mid-market private equity firm LDC looking to ramp up investments in Wales and the South West

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Mid-market private equity firm Lloyds Development Capital (LDC) completed transactions with a combined value of more than £280m in 2021 in Wales and the South West of England.

In its annual performance summary the private equity arm of Lloyds Banking Group, said it will increase its support for mid-market firms in Wales and the South West underpinned by a commitment to invest in at least 100 medium-sized businesses nationally over the next five years.

Deals backed by LDC in Wales including supporting HSL Compliance, an SGI company, to acquire Llanelli-based Albany Oak, an established water and effluent treatment specialist. The transaction expands SGI’s services into industrial water treatment. LDC also supported Zip World to launch a multi-million-pound new attraction in the Cynon Valley.

It also invested in Bristol-based digital media company Hybrid and Sohonet, a leading international provider of connectivity, collaboration software, media services and network security for the media and entertainment industry.

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The firm also exited its successful four-and-a-half-year partnership with water-based heating systems specialist Adey. Following LDC’s investment in June 2016, the Gloucestershire-headquartered business went on to develop new products, strengthen its commercial water-testing service through its acquisition of Alpha Scientific. It grew net revenues from £34m to £51m in the process.

Dewi Hughes, partner and head of LDC in Wales and South West, where it operates out of offices in Cardiff and Bristol, said: “The team’s activity during the last 12 months is testament to the strength and resilience of management teams based in Wales and the south west that are continuing to target growth.

“As we enter 2022, we are confident and enthused about the prospects for mid-market firms in the region. We are committed to increasing our support for these businesses to help them to bring their ambitions to life.”

UK-wide LDC backed 19 new management teams and invested more than £400m during 2021, despite continuing disruption caused by the Covid pandemic.

It also provided additional capital to existing portfolio companies to complete 65 acquisitions, helping them to scale and diversify.

Across the UK, LDC generated over £870m of proceeds from a total of 18 exits during the year with an average money multiple of 2.5 times.

The companies it sold on average increased revenues by 64% and grew employee numbers by 60% during their partnership with LDC.

LDC chief executive Toby Rougier said: “Despite the ongoing challenges in many parts of the economy, our teams increased investment and support into mid-market companies across all the regions of the UK

“As the UK looks to recovery and growth, this army of medium-sized companies will be critical. It is the backbone of British business and the engine room of our economy, teeming with talent and packed with potential. Given their ability to scale, these are the companies that, with the right support, can turbo-charge the recovery.”