3i and LDC have sold their stakes in MKM Building Supplies, the UK’s largest independent builders’ merchant, to Bain Capital.
The management team at MKM will retain a significant shareholding in the Hull-based business.
A spokesman said: “3i’s 2006 investment, which was partially syndicated to LDC, has supported founder David Kilburn with the firm’s ambitious growth plans.
“Since 2006, revenues and profits have more than trebled. During this time, the business has also developed from a regional to a national player, expanding to 47 branches across the country.
“The business has consistently grown like-for-like sales well above listed peers through superior service and category expansion, generating revenues in excess of £284 million in 2016 and employing over 1,100 people.
David Kilburn, the founder and executive chairman of MKM, said: “MKM has enjoyed exceptional growth over the past twenty-one years and I would like to thank 3i and LDC for their long-term backing and support. We are looking forward to working with Bain Capital for the next stage in MKM’s development. The UK builders’ merchant market is anticipated to grow to £13 billion by 2020 and we expect to expand our UK branch network significantly.”
Matthias Boyer Chammard, principal, Bain Capital Private Equity, said: “We were attracted to MKM’s best-in-class customer service, underpinned by its unique business model, which has enabled the firm to significantly outperform the market.
“Bain Capital has a strong track record of applying its expertise in the building materials and construction sectors to successfully grow companies, including Ibstock in the UK. We are delighted to have the opportunity to partner with the MKM management team to further expand the business throughout the UK.”
Jonathan Crane, director, 3i Private Equity, said: “David’s leadership and MKM’s unique business model have driven impressive financial performance and a long-term track record of growth. We are proud to have supported David and the company during this period of transformation and wish them all the best with their exciting future expansion plans.”
The transaction is subject to regulatory approvals. Subject to these approvals, the transaction is expected to complete by May 2017.
Rothschild acted as lead adviser to the selling shareholders alongside Addleshaw Goddard, as legal adviser, and PwC and OC&C who provided vendor due diligence assistance.
Moelis & Company and PwC advised Bain Capital, with Ropes & Gray as legal adviser.