Clydesdale backs £130m management buy-out of U-POL

U-POL, a world leader in automotive refinish products, has undergone a £130 million management buy-out backed by mid-market private equity specialist Graphite Capital with funding from Clydesdale Bank Corporate & Structured Finance.

The business was acquired from private equity investor AAC Capital Partners. Clydesdale provided a £61 million funding package as part of a ‘banking club’ which also included RBS, HSBC and Bank of Ireland.

The deal gives Graphite a majority stake in the business. It is the second time that Graphite has invested in U-POL, having backed a management buy-out in 2002 and sold it to AAC three years later. U-POL chief executive, Phil May, who joined the business in 2006, is leading the senior management team, all of whom are reinvesting a substantial proportion of their proceeds.

The U-POL brand is recognised around the world for quality and innovation. From its manufacturing facility in Wellingborough, Northamptonshire, U-POL supplies professional vehicle bodyshops in over 110 countries worldwide with a broad range of refinish products used in accident repairs. These include body fillers, coatings (primers and clear coats), aerosols, adhesives and polishes as well as complementary products to provide customers with a complete solution. Responding to the needs of different local markets, and with the benefit of its dedicated research and development team, it typically launches around 25 new, high performance products each year.

The long established market leader in the UK, U-POL has successfully entered fast-growing markets like Russia, China and Africa and has increased its market share in more developed markets such as the USA and Western Europe.

Over the last decade, U-POL has grown its revenues significantly ahead of the overall market with a compound annual growth rate of more than 10 per cent, and profits have also grown strongly. The company has shown considerable resilience during recessionary periods thanks to a number of positive factors, including the wide range of territories in which it operates and its broad range of products.

The business continues to show robust growth in the current year. U-POL is ideally placed to capitalise on the increasing number of low-speed, low-damage accidents fuelled by rapidly expanding car ownership numbers in developing countries and increasing levels of congestion in urban areas everywhere. Its high performance refinish products enable bodyshops to significantly reduce repair costs, compared with the cost of replacement panels.

Andy Oates, Clydesdale Bank Corporate & Structured Finance director in London, led the team which also included Mike Budge and Ross Goodwin. Andy Oates said: “Having known the business from the original buy-out, we are exceptionally pleased to be involved in supporting Graphite Capital and the management team in the next stage of U-POL’s journey. U-POL has consistently proven itself to be a very strong trading business, driven by sound market dynamics and an experienced management team. With this consistency in growth, even in face of a recession, U-POL finds itself exceptionally well placed for even further geographic expansion and growth in the future.”

Graphite Capital partner, John O’Neill, commented: “We are delighted to have the opportunity to invest in U-POL again. This is a first class business which manufactures and sells, under its own brands, high quality, innovative products and has substantial growth potential in a global market worth some £2.5 billion.”