The minority stake specialist

MML Capital Partners delivers growth with development and acquisition capital for ambitious businesses, writes Bal Johal.

MML Capital Partners delivers growth with development and acquisition capital for ambitious businesses, writes Bal Johal.

Challenging market conditions and stalling private equity deals haven’t stopped MML Capital Partners from writing eight deals in the last 12 months.

Since the beginning of the credit crunch, MML has provided £125 million of growth and acquisition capital to a broad range of businesses, including gaming operator Yonkers Raceway, contract caterer Baxter Storey, security specialist Argyle and crane
operator TNT.

“MML is a new breed of private equity investor, one that rather than shy away from not having majority control has embraced the opportunity to be a specialist minority partner,” says MML’s managing partner Johal.

“In the current environment management teams are finding comfort in working with houses, such as MML that have a proven history of partnering through the economic cycle to deliver great value for shareholders.”

Decades of deals

The company celebrates its twentieth birthday this year with £1 billion worth of investments in 83 deals under its belt. Despite two decades of deal-making, Johal says the business’s investment approach has moved with the times.

“MML started life as Europe’s first independent mezzanine finance provider. However, the business has evolved to become what we term a ‘partnership capital investor’. This means we typically invest in growing companies for a minority stake alongside owner-managers or in partnership with other private equity houses,” says Johal.

MML is a specialist minority equity partner rather than a majority control investor, which is where it differs to the approach taken by traditional private equity players: “We do not dictate to the management team. We prefer to work with them to deliver the strategy,” he says.

“We can offer a combination of mezzanine and equity finance skills under one roof, which offers a flexible approach to structuring deals. This often leaves management with a greater equity stake than under a traditional private equity structure.”

Finance formula

Whilst a number of traditional private equity houses and mezzanine providers offer mezzanine and equity expertise, “this is more easily said than done,” says Johal.
“For other investment houses, minority investing has tended to be a sideline activity and many lack the combination of debt and equity skills that we have blended at MML over a substantial period of time.”

Current market conditions have seen deal volumes fall dramatically. However, MML is finding its deal flow is still relatively strong. Johal explains that this comes as “a result of vendors not wanting to sell a majority shareholding in a depressed market and companies being unable to raise bank debt to pursue growth and acquisition opportunities.

“MML’s model provides a solution to these problems.”

Marc Barber

Marc Barber

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.

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