Darwin agrees second deal

The UK firm has purchased Hampson Aerospace Machining for £24m, roughly half of which was comprised of senior and mezzanine debt from Lloyds.

Darwin Private Equity has completed its second deal, a little less than a year after closing its debut fund on £217 million.

The firm purchased Hampson Aerospace Machining, a division deemed non-core by its publicly traded parent Hampson Industries, in a £23.7 million ($39 million; €27 million) deal. Lloyds TSB Corporate Markets contributed roughly half of that amount via a mix of senior and mezzanine debt.

“It’s great that one of the UK lenders stepped up and have written a reasonable cheque,” firm co-founder and partner Jonathan Kaye said of the financing.

It’s great that one of the UK lenders stepped up.

Jonathan Kaye

Darwin partner Kevin Street led the deal for the aerospace components manufacturer, which counts major companies including Rolls-Royce and Goodrich as customers and employs around 300 people in Birmingham, Leicester and Alceister.

The private equity firm has set aside roughly £1 million for immediate investment in the business, namely for new machinery, a move Kaye anticipates will lead to jobs growth.

Joining the company as respective chairman and finance director are John Hudson, chairman of the Birmingham International Airport, and Jeff Walker, who Darwin said has worked with Hudson in private equity-backed businesses for a decade. The private equity firm said in a statement that its team has a longstanding relationship with both Hudson and Walker.

Darwin was founded in 2007 by Kaye, formerly of CVC Capital Partners, along with ex-Permira executvies Street and Derek Elliott.

The lower mid-market firm closed its debut fund approximately a week prior to Lehman Brothers’ collapse in September 2008, since which “it’s been a difficult time” for private equity firms seeking fresh deals, acknowledged Kaye.  “Even though we’ve only done one deal [since the fund close], we’ve clearly looked at a lot of opportunities.”

It was notably one of several private equity firms that had been interested in acquiring a minority stake Innocent Smoothies earlier this year. “We were pipped at the post by Coca-Cola,” said Kaye. “Their pocket is slightly deeper than ours”. Coca-Cola reportedly paid £30 million for a stake in the bottled smoothy maker.

Kaye said the firm has “a couple of irons in the fire” and hopes to close another deal before the end of the year.