Lupus Capital, the listed investment business, has announced a £2.1million capital injection from former Tomkins CEO Greg Hutchings, who will join the board of directors as executive chairman.
Hutchings is making his investment in exchange for a 12.5 per cent stake in the firm, which is capitalised on the London Stock Exchange at around £14 million. The proposal is subject to approval at an extraordinary general meeting, which the firm says will be held shortly.
Lupus will seek to acquire undervalued businesses and then apply “proven management skills and systems” to turn them round. The company is going through a transitional period after the previous board of four directors was ousted in November 2002 following pressure from activist shareholders angered by the firm’s £1.4 million annual burn rate when managing only five investments.
Since then, chairman Konrad Legg has focused on tidying up the balance sheet. By the end of last year, he had succeeded in reducing debt from £3.8 million to £300,000. A statement about Hutchings’ appointment said Legg, Fred Hoad and Roland Tate would continue as non-executive directors while further directors would be appointed “in due course”.
The statement added that Gall Thomson, the Norfolk-based supplier of marine breakaway couplings which is Lupus’ largest investment, would now be retained as it had “entered 2004 with a healthy order book”. The firm had been up for sale since 2002.
Hutchings joined UK industrial conglomerate Tomkins in 1983 and was chairman or chief executive from January 1984 until October 2000, when he stepped down following revelations about his use of corporate jets and household expenses. A subsequent investigation by Ernst & Young said he had not broken the law or breached corporate governance standards.
Hutchings will follow in the footsteps of Chris Miller, David Roper and Simon Peckham who joined listed investment firm Melrose Resources towards the end of last year to make private equity-style investments. The trio built up Tomkins’ rival Wassall from a £2 million company into a leading conglomerate before selling it to US private equity firm Kohlberg Kravis Roberts for £627 million in 2000.