Gresham breaks even on bottle manufacturer

The exit comes after Gresham-backed West Cornwall Pasty Company went bust and was acquired by turnaround investor Endless.

UK-based Gresham Private Equity has broken even on its investment in bottle manufacturer Esterform Packaging, according to a source familiar with the matter.

Gresham declined to comment, but the source said the firm has sold the business back to the company’s management. The UK-based bottle supplier manufactures a range of plastic bottles for the soft drinks, alcoholic and speciality markets. Gresham made an investment in the business in April 2007, when it provided a total funding package of more than £30 million to support the company’s future growth, according to a statement at the time. Lloyds TSB Acquisition finance provided debt for the transaction.

The divestment comes shortly after one of Gresham’s portfolio companies, West Cornwall Pasty Company, went into administration. The Cornish pasty business has since been snapped up by Enact, a £7.5 million fund launched by UK turnaround investor Endless earlier this year. Gresham backed West Cornwall Pasty Company in October 2007.

Both Esterform and West Cornwall Pasty Company were investments from Gresham’s Fund IV, a £340 million 2006-vintage, which is fully invested. West Cornwall Pasty Company marks the second time Gresham has lost an investment from this fund. In 2009, Betts Global, a toothpaste tube manufacturer went into administration, after the business failed to keep up debt repayments. Gresham bought the company in 2007 for £110 million – including £75 million of debt – from a consortium comprising UK buyout firm Permira and Scottish banks RBS and HBOS.

The divestment of Esterform comes after Gresham underwent a restructuring in recent months. During the past year, six partners have left the firm, reducing the total number of partners from 13 to seven. Former managing partner Paul Marson-Smith was among those who left.

Gresham is preparing to come to market with its next fund, Gresham 5, which is expected to launch this year with a target of between £150 million and £200 million. Ahead of the fundraise, Gresham will focus on realisations in the coming months, a source close to the matter told Private Equity International in January.

In February, Gresham sold LAS Claims Management to the Innovation Group for £35 million in cash. A month prior, it sold footwear company Hotter Shoes to Electra Partners, delivering a return of “more than 3.5x”, a source told PEI at the time. Gresham sealed two exits in 2013, selling recruitment firm Swift Technical Group to Wellspring Capital Management for a 2x return and training company 7City for approximately £90 million, netting the firm a 3x return.

Gresham’s third fund, a £235 million 2004 vintage, is understood to have delivered LPs a 2.2x return to date, PEI reported in January.