PEO: Langholm has a reputation among investors for offering something different. What is it, in your opinion?
BW: Structurally we are just like any mid-market fund, owned and controlled by its partners. What makes it different is the focus on faster-growing, consumer-facing businesses in Europe.
PEO: Don’t other firms also claim sector focus?
BW: Yes, but we deliver in the execution, in the way we find investments and add value. We have a positive association with existing sector participants, such as Unilever, the consumer goods group, which is a 40 percent investor in the fund.
PEO: What does Unilever look for from its investment?
BW: This is the way it has chosen to involve with smaller, fast-growing companies: at arm’s length. There was no existing fund in Europe with our investment focus, so they helped establish ours.
PEO: Are you a captive corporate fund?
BW: No, we are completely independent while enjoying all of the benefits of a corporate relationship. We agreed a scope for our investments of four principle consumer trends – health and well-being, branded innovation, services for an ageing population and convenience – and Unilever has no special rights. Rabobank, which has a 30% stake in the fund, equally has no special rights. When we were looking for re-insurance and fund management facilities for Just Retirement, a life insurance start up business, Rabobank subsidiaries Interpolis and Robeco won both these roles on arms-length contested, competitive bids.
PEO: So how do portfolio companies benefit from the relationship you have with investors like Unilever?
BW: With an investment like Dorset Cereals, a breakfast cereal company, we are able to draw on Unilever people to help the company develop. The business had grown by word of mouth, but the existing accounting function did not show how much profit it made per product, per customer. We got a Unilever executive on secondment, who re-engineered the factory and helped us introduce smart operating tricks. Now they can forecast demand and make to stock. You can plan a future.
PEO: What about marketing?
BW: We worked with a marketing executive on secondment who ran a vigorous process to reposition the product and packaging for a new group of consumers. It also helped redefine the category by breaking all the rules.
PEO: What next for Langholm?
BW: With the market awash with cash you have to differentiate your approach. It was tough to begin with, but we have shown our model works. We have a good pipeline of opportunities and a toolkit to deploy as appropriate.