On the back of one of its most productive years, when new investments have risen to £28.4 million (up from £12 million during the period before), NVM Private Equity’s most recent deals have not been part of a wide process involving lots of competing bidders, but have grown out of existing relationships with the corporate finance community and non-execs built up over a number of years.

Peter Hodson, director at NVM, says that deal activity has been increasing during the past year, despite the ongoing mixed macroeconomic conditions: ‘In terms of the number of deals and amount invested, the past 12 months have been among the biggest in our history. The deals we have completed have generally been more one-off situations that we have been able to exploit because of the relationships we have built up over many years.

‘If you look at the investments we’ve completed, they haven’t been part of conventional competitive auction processes, they have nearly all come from different channels.’

NVM, which manages funds of more than £200 million, has undertaken a combination of new investments and bolt-on buys for existing portfolio businesses. There is a strong theme of backing incumbent management teams that have been in the business for some time, a strategy that Hodson says is all about lowering the overall risk of the company’s investments.

He points to the £4 million investment in Cawood Scientific, through an MBO, as a case in which NVM’s involvement was brought about via an existing relationship.

Analytical laboratory testing services business Cawood was already working with a private equity firm, but Hodson says that the deal framework was not working for the company. As a result, its management team had lost faith. However, the adviser felt comfortable introducing Cawood to NVM, which was able to find a solution that would work for everyone.

As part of the investment, NVM brought in former president of the National Farmers’ Union Sir Ben Gill as the new chairman. It’s a move that Hodson says is about introducing external expertise, bringing a new perspective on growing the business and a range of valuable contacts from within the environmental/agricultural sector.

Regional Coverage

In April, NVM invested £7.5 million in development capital into North-East wholesaler Kitwave, highlighting what Hodson describes as its regional presence. On the back of the initial investment, Kitwave has now acquired confectionery and soft drinks seller Automatic Retailing as the NVM portfolio business looks to build scale and strengthen its buying power.

After a busy year, investing nearly £30 million, NVM has announced its plan to raise £15 million of new money through its Northern 2 VCT fund. Hodson concludes that ‘while the outlook for the next 18 months is uncertain, we are confident that there will be profitable investment opportunities’.