H2 acquires UK sweets wholesaler

The Amsterdam-headquartered firm has bought cash-and-carry business Hancocks, the fifth deal from its €300m H2 Equity Fund IV.

Hancocks sells
sweets to
retailers
in the UK.

H2 Equity Partners has taken a majority stake in Hancocks Group, a UK confectionery wholesaler, for an undisclosed amount, the firm said in a statement. The remaining minority stake was acquired by the company’s management team.

Hancocks was established in 1962. The wholesale business sells sweets to supermarkets, cinemas, corner shops and other retailers in the UK. The business will continue to be run by Mark Watson, the current chief executive. The founding family, which owned and managed Hancocks for 50 years, has now exited the company.

H2 aims to expand Hancocks’ national presence, develop its branded and own-label product ranges and increase the company’s online activities. Although Hancocks’ sales rely indirectly on consumer spending, there are growth opportunities, according to Patrick Kalverboer, one of H2’s managing partners.

“The market for confectionery products in the UK has risen every year in the last ten years, [even] through the economic crisis. Consumers are prepared to buy small treats for themselves,” he told Private Equity International. H2 also liked the fact that 40 percent of Hancocks’ revenues came from its own- label products, he said.  “Hancocks' clients, corner shop owners for instance, will have a better revenue margin on this than on branded chocolate bars,” he said.

The market for confectionery products in the UK has risen every year in the last ten years, [even] through the economic crisis

Patrick Kalverboer

Amsterdam-based H2 used its €300 million Fund IV, a 2011 vintage, for the investment. This the fifth transaction from the fund, and the firm’s third deal this year. In August, it acquired paper factory Parenco and paper recycling business Reparco from Norske Skog, while earlier this year, it acquired Belgium glass manufacturer Durobor. In September, H2 said Fund IV was approximately 20 percent deployed.

Investec Specialist Bank provided H2 with a debt and mezzanine financing package. Both H2 and Investec declined to comment on the transaction details. However, Gert Jan van der Hoeven, one of H2’s managing partners, told Private Equity International in September that the firm is “not a leverage buyout player”. Instead, he said, the firm makes investments that are “focused on the improvement of the company’s profitability… Leverage is used, but leverage gain is not the prime source of our returns.”

H2 has offices in Amsterdam, London and Cologne and invests in medium sized businesses in the Benelux, UK and Germany. It has a total of £425 million (€528 million, $678 million) under management.