3i invests £28m in THE

3i has backed portfolio company Total Home Entertainment (THE), a provider of home entertainment products, with a £28m investment.

THE, the largest UK-based independent wholesaler of home entertainment products, has received a £28m investment from listed venture capital firm 3i

THE, which is based in Stoke-on-Trent, was created in 2000 as a management buyout from Menzies. The firm, which has a turnover of around £300m, provides products including DVDs, CDs, books and PC multimedia games to the likes of Morrisons, Sainsbury’s and Somerfield from over 500 individual suppliers.    

The investment will support the company’s growth ambitions in the DVD market, where DVD players have only penetrated 33 per cent of UK households so far, and the multimedia games market, which is benefiting from the continuing development of hardware platforms. The book market has seen a rise in demand over the last two years, as the threat from e-books has not materialised to the extent predicted. But the firm does face a real threat in the CD market, because of the widespread availability of singles for downloading.

Coinciding with the investment, 3i has drafted in Simon Burke as chairman of THE. Burke worked on the turnaround of toy retailer Hamleys and its subsequent sale to Baugur, having previously been head of Virgin Entertainment. Dennis Ashton and Warren Mason continue as joint managing directors of the business. 3i Midlands director Richard Bishop said THE had the potential to become a £500m revenue company.

THE was advised on the deal by Catalyst Corporate Finance and Hacking Ashton, while 3i was advised by Deloittes and Wragge & Co.

3i is aiming to achieve the final closing of its Eurofund IV fund at E3bn by the end of this year.