Doughty sells stake in UK food group

Doughty Hanson has exited its investment in RHM, makers of Hovis bread and Mr Kipling cakes, with the sale of its remaining 26% stake through a secondary placing.

Doughty Hanson, a London-based private equity firm, has fully exited its investment in UK food group RHM, formerly known as Rank Hovis McDougall with a secondary placing of 93 million shares priced at 266 pence, worth approximately £247 million (€356 million).

At 2.30pm GMT today, RHM shares were trading at 271 pence, up 3 pence from the start of trading this morning.
 
Credit Suisse acted as sole bookrunner and lead manager of the placing.
 
Doughty Hanson sold its remaining 26.6 percent stake in RHM after floating a majority stake on the London Stock Exchange last July with a price of 275 pence per share. The IPO generated a return of over three times equity invested, returning $585 million to investors. Credit Suisse also acted as sole book runner in the flotation.
 
Doughty Hanson acquired the company from Tomkins in August 2000 for £1.2 billion, comprising £308 million of equity and £872 million of debt.
 
The exit provides investors in Doughty Hanson & Co Fund III, which closed on $2.66 billion in 1998, with a total return of 3.3 times.
 
RHM owns a number of UK food brands including Hovis bread, Bisto gravy, Paxo stuffing mixes and Mr Kipling cakes.
 
Doughty Hanson said that Fund III has returned more than $4.4 billion to investors at a realised gross multiple of 2.3 times. Other realisations from the fund include the sales of Priory Group to Dutch bank ABN AMRO for £875 million and Knowles Electronics to New York-based Dover Corporation for $775 million in 2005; and the flotation of UK sportswear maker Umbro at £145 million in 2004.
 
In January 2005, Doughty Hanson closed its current fund, Fund IV, with €1.6 billion of commitments. The fund has so far made six investments: Saft; Balta; ATU; Tumi; Moeller Group; and HellermannTyton.