Ward Homes, the Kent-based house builder, was taken private in 2000 by Phildrew Ventures Funds and its management team led by chairman David Holliday. IRRfc oversaw a partial exit in 2002 via a secondary buyout led by RBS Debt Ventures, which saw Phildrew retain a 22.6 per cent interest.
The sale to Wilson Bowden followed a ‘tight’ auction process run by Deloitte & Touche Corporate Finance, which advised on the original take-private. The sale of its stake brought Phildrew’s overall return to 2.4 times money, generating an IRR of 46 per cent per annum. The firm made an initial investment in 2000 of £8.2m.
IRRfc partner Frank Neale attributed the success of the investment to favourable market conditions as well as an ‘excellent’ management team headed by Holliday. Phildrew had previously worked with Holliday when he set up Admiral Homes, the house builder that was subsequently acquired for £62m by rival firm Bryant in 1996.
The former Phildrew Ventures, which invested in UK mid-market buyouts, bought itself out of UBS Capital in 2002 and re-launched itself as private equity advisory firm IRRFc. Instead of raising a fund and making investments, IRRfc opted to extract value from private equity interests by seeing them through to exit in exchange for a management fee and a share of the proceeds.
The firm currently advises the Phildrew Ventures III, IV and V funds on behalf of UBS and other institutional investors. Neale said around one-third of the total Phildrew portfolio has now been liquidated, with two more exits ‘in the pipeline’. He added that the firm is hoping to win ‘one or two’ mandates to manage other portfolios ‘imminently’.
Neale added that the firm was currently working on its first transaction alongside a secondary buyer. The deal, which Neale described as being ‘rather like an MBI’, would see IRRfc work with a selected secondary firm in buying a portfolio – a deal in which IRRfc would itself invest a small percentage, before going on to manage the assets.