Private Equity News & Analysis

HBoS backs £450m Polypipe buyout(2)

Scottish bank HBoS’s corporate arm has backed the management buyout of Polypipe from US buyout firm Castle Harlan as chief executive David Hall attributed the company’s rapid growth over two years to being free of “corporate shackles”.

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US buyout firm Castle Harlan has sold Polypipe to management backed by Scottish bank HBoS, for £450 million ($900 million, €663 million).

The company provides pipes to national and independent builders, plumbers, merchants, housebuilders, and civil engineering contractors.

Equity and bridge finance for the deal was provided by the bank’s integrated finance team, while the 50-strong management has increased its original minority stake to acquire the company.

Castle Harlan originally brought in David Hall as chief executive of Polypipe in its £293 million acquisition from Birmingham-based engineering group IMI in 2005. Hall led the management buyout.  

Hall said: “The company’s price has risen because it broke free of the shackles of being a corporate. We focussed the company on its core business selling off the garden furniture arm. Conditions were good in the construction industry with a lot of government money going into social housing and we invested heavily in the company.”

Castle Harlan bolted on Swiss-based above-ground drainage business Geberit in July for £42.5 million. 

The house-building sector has proved popular with private equity. French buyout group PAI Partners bought housebuilder Kaufman et Broad, for €1.3 billion ($1.8 billion) in June. Swedish firm Industri Kapital sold housebuilder Prevesta for SKr 1.9 billion (€204 million, $276 million) generating a return of nearly ten times its initial investment in March.

HBoS bought a stake in the £410 million buyout of social housing maintenance company Apollo last week alongside Lloyds TSB.