LDC, the buyout arm of UK-based Lloyds Bank, has acquired a minority stake in macroeconomic research company Capital Economics in a deal valuing the company at £70 million, the firm said in a statement.
Founded by Roger Bootle in 1999, Capital Economics is headquartered in London and has almost 100 employees, around half of whom are economists working across offices in London, Toronto and Singapore. The company produces global, regional, and country research, as well as specialised analysis of financial markets, commodities and the consumer and property sectors. It also carries out commissioned research projects.
Delivering research to around 1,300 institutional clients in 70 countries across a variety of sectors, including banks, asset management firms and governments, around 70 percent of Capital Economics’ sales are outside the UK, with the US being the largest single market.
LDC said its investment would widen ownership of shares amongst Capital Economics staff and strengthen the management team. The company will also push forward with the development of new products, including dedicated services for India plus each of the major commodity types, as well as looking into the possibility of additional offices overseas.
While Bootle will continue to lead the management team as executive chairman, existing company directors Jonathan Loynes and Julian Jessop will sit on the new board, along with Mark Harris as finance director. LDC CEO Chris Hurley and investment director Chris Neale will join the board, along with Peter Rigby, former chief executive of Informa.
In a statement, LDC said that “demand for research is forecast to increase substantially, at the expense of so-called ‘free’ sell-side research”, as consumers continued to place greater importance on impartiality and investment banks “de-emphasised” their research operations to cut costs and combat conflicts of interest.
LDC, which invests from the bank’s balance sheet, invests in mid-market businesses in the UK. Earlier this month the firm invested £42 million in the Eley Group, an ammunition manufacturer whose products are used in target shooting by Olympic standard athletes at all major global tournaments. The company employs more than 120 people and forecasts a turnover of £17 million and EBITDA of £6.1 million for 2014.
In June LDC sold its stake in Metronet, a provider of wired and wireless internet connectivity based in Manchester, in an exit that netted the firm a 4x return. In July the firm netted a return of almost 3x when it sold pharmaceutical manufacturer Penn Pharmaceuticals for £127 million to a trade buyer.