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Graphite exits medical device company

The UK mid-market firm has made a three times return in six and a half years, selling Summit Medical to The Riverside Company, after a refinancing in 2005.

European mid-market buyout firm The Riverside Company has bought Summit Medical from Graphite Capital for £36 million ($71.5 million; €45.2 million), according to Mark Hudson, a partner at the UK mid-market firm.

Graphite more than doubled turnover and profits at Summit during its six and a half years of ownership to make a three times return on its investment. Summit’s turnover is now more than £16 million. Graphite bought the company in 2001 for £17 million.

Graphite bolted on hip and knee implant business Marlux Medical and disposable curtains business Orthodynamics to Summit. It also managed to realise the majority of its investment through a refinancing with HBoS in 2005, Graphite’s bank throughout the deal, Hudson said. He declined to disclose terms.

“This was a positive refinancing where the bank increased the amount of debt because it was comfortable holding the business,” he said.

Hudson said the lengthy hold had been facilitated by the refinancing and the desire to embed the bolt-on investments into the company. “We pushed out the exit for all the right reasons” He said Graphite wanted to see the bolt-on through.

Summit’s other products include specialist orthopaedic implants and a blood transfusion system, which allows patients to have their own blood re-infused after surgery. More than 80 percent of acute hospitals in the UK use Summit’s products.

Hudson said the medical device sector is not only a defensive sector, but also a growth sector. He said: “More and more people are looking for quality of life, such as knee and hip implants for their very active lifestyles. The aging and active population drives demand for these sorts of products.” He said Summit had invented a range of patented products and a natural step is to sell these products into other markets.

This is the ninth acquisition by The Riverside Company in 2008 and its fourth in Europe in only six weeks, following the buyouts of electronic equipment test manufacturer EM Test Group for an undisclosed sum and of public relations company M:Communications and proxy solicitation company D.F. King for $180 million in February.