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The Opportunity
Family owned Hancocks appointed corporate finance advisors to help it sell the company in 2012. There was no succession within the family to continue to manage and build the business and the decision to sell 100% of the business had been taken. H2 Equity Partners was introduced to the opportunity and during the first meeting with management immediately recognised the potential of the business to further develop and grow both sales and profitability.

Hancocks, headquartered in Loughborough, was the UK’s largest confectionary specialist, selling confectionary and chocolate via a network of cash-and-carry depots, direct to retailers and had just started selling online. Annual revenues amounted to ca. £110 million. Being a true specialist, the company managed over 4,000 SKUs and combined own brand ranges with leading A-brands and servicing various routes-to-market. Hancocks was led by an excellent CEO, but he had a clear desire to retire within a few years and the company had not invested in building a strong 2nd tier management team. Shareholder and management succession were key issues that needed to be addressed.

H2’s Investment and Approach
In November 2012 H2 acquired Hancocks within a short period of being introduced to the company. H2’s investment thesis for Hancocks focused on covering all routes-to-market, increasing the share of own branded product (through own product development and packaging design), various operational improvements and managing the CEO succession over time. We had identified pricing as a major opportunity for profit enhancement and within three months had improved the EBITDA run-rate by ca. £1 million on the back of specific pricing actions. During our investment period Hancocks executed three add-on acquisitions, adding online capabilities and a delivered solution. Revenues grew to ca. £160 million per year and EBITDA doubled. A well planned and executed management succession plan was implemented and allowed the original CEO to first move to a non-executive chairman position and later fully retire upon our exit of the business.

The Outcome
Hancocks achieved a market-leading position in the UK confectionary industry and in 2017 was acquired by a trade buyer with obvious sales and procurement synergies. The new management team remains with the business and the combined group is set for continued growth.

The Opportunity
H2 Equity Partners was approached during the summer of 2013 to evaluate an investment opportunity to acquire Eurocell from its Belgian listed parent company. The company had been designated “non-core” by its owner and was its only material UK subsidiary active in the building materials market.

At the time, Eurocell was one of the leading PVCu profile and roofline product manufacturing and distribution businesses in the UK generating sales of ca.£150 million per annum. It’s main manufacturing sites were based in Alfreton (Derbyshire – United Kingdom) and the company had a network of 120 branches throughout the UK. Profitability levels were decent, but the lack of focus from the parent company and the ongoing divestment process meant that management was restricted in its ability to aggressively grow and improve the business.

H2’s Investment and Approach
H2 acquired Eurocell in September 2013 and immediately started to develop an ambitious growth and profit improvement plan in conjunction with management. Eight key strategic initiatives were identified with the aim to double EBITDA over the next few years. Each strategic initiative was led by a Eurocell manager and a H2 team member. The quality improvement teams and renewed management focus resulted in a quick implementation of the plans; and virtually all strategic initiatives delivered results ahead of the planned timing and EBITDA impact. Within 18 months the business had managed to more than double its EBITDA and significantly grow its sales.

The Outcome
Eurocell PLC is now listed on the Main Market of the London Stock Exchange and has continued to deliver attractive returns for its stock market shareholders. H2 Equity Partners sold its last remaining shareholding in Eurocell in March 2017 and has generated strong returns on its investment while creating a strong, growing, and sustainably profitable business in its segment.

The Opportunity
H2 Equity Partners began evaluating a potential investment in Ballast Phoenix in early 2014. Ballast Phoenix was a relatively small but market leading recycling business of incinerator bottom ash (IBA) – a by product of the incineration of non hazardous household waste to generate electricity. As a non-core subsidiary of a distressed Continental European construction conglomerate, a transaction needed to be deliverable and deal with significant carve-out issues relating to shared services, engineering support etc.

At the time of the investment, Ballast Phoenix (based in Bourne – Lincolnshire) was the UK’s market leader in IBA recycling. IBA recycling is a small but fast growing segment of the recycling industry as government and councils actively avoid landfill and promote the incineration of waste. The company operated seven sites and had the ability to grow aggressively provided significant capital expenditure could be funded. The business generated annual revenues of ca. £20 million and was profitable. However, the required capex funding to deliver the growth amounted to ca. 2x the annual EBITDA… and the company had never operated on a truly stand-alone basis.

H2’s Investment and Approach
H2 invested in Ballast Phoenix in July 2014. An aggressive growth plan was developed jointly with management aimed at expanding the number of sites from 7 to 12 within a few years. The ambition was to establish Ballast Phoenix as the only “go to” partner in the UK for the large waste management companies that operate on an (inter)national scale. Within six months Ballast Phoenix managed to secure six new contracts, became the preferred recycling partner for one of the largest energy-from-waste operators in the UK, and raised funding to commence building its new processing factories. During this phase the company not only grew rapidly, but also had to strengthen its management team, introduce management reporting and become a business that could operate on a truly stand-alone basis. Combined with specific improvement actions relating to improved pricing and metal extraction within 12 months there was clear visibility to more than double the company EBITDA in just a few years.

The Outcome
A private equity backed trade buyer approached H2 about acquiring Ballast Phoenix, attracted by its market leading position in the UK and the extremely strong visibility of revenue and profit growth for the coming years. The trade buyer had a clear strategy of combining Ballast Phoenix with its own international operations and management and H2 Equity Partners decided to sell the company with Ballast Phoenix management taking leading positions in the new group.