Lloyds’ Private Equity Arm to Inject More Money into Mid-Market Companies


May 27, 2015

Lloyds Banking Group’s private equity arm has promised to boost investment in British medium-sized businesses. LDC has announced plans that would see the firm invest around £1.2 billion in the mid-market sector in the next three years. Is the sector “the forgotten army” of the British Economy?


The Plans
LDC, which used to be called Lloyds Development Capital, has pledged to provide £1.2 billion on Monday and said the investment in the mid-market sector would help boost the UK economy further.


Furthermore, the private equity firm is not only planning to provide an injection of capital into the sector, but LDC will also help the mid-market companies to grow, both at home and abroad. According to the Telegraph report, only 17% of the sector’s companies have operations beyond Europe. The number of companies exporting outside Europe is much smaller compared to how much other mid-market companies in Europe export globally.


Chris Hurley, joint chief executive of LDC, was quoted by the Telegraph stating, “Mid-sized businesses are vital to the UK economy, and our core aim is we want to help them grow more quickly.”


The Sector’s Importance
The Confederation of British Industry (CBI) has previously called the UK’s mid-sized businesses as the “forgotten army” of the country’s economic recovery. According to CBI, the sector has expanded by 5% in the previous five years, which is a larger expansion rate when compared to that of small and large companies. In 2012, the sector contributed £270 billion to the UK economy.


The importance of this sector to the UK economy is enormous. Even though the sector only represents 0.5% of the active businesses in the country, the sector stands for one-fifth of employment and turnover.


The Firm’s Previous Efforts
The private equity firm has been active in the market. In the last three years, the firm has injected £930 million in medium-sized businesses.


In March, the firm backed a buyout of SSP, a global insurance technology business. The £207 million buyout deal saw the company invest together with US-based Hellman & Friedman and the Scottish Equity Partners.


In fact, in the previous year, LDC has been UK’s most active mid-market investor when looked at the deal volume. It has completed six deals in the year to date, with total value standing at £200 million.


The Telegraph article quoted one mid-sized business owner, which received a £22 million capital injection from LDC in 2013. Tom Joule, the founder and chief executive of Joules, told the newspaper, the private equity firm was vital for the company’s success in expanding into the US and Germany.


“They (LDC) are not focused on the ‘low-hanging fruit’ like bankers, who just want a quick return,” Mr Joule told the Telegraph. Mr Joule also asked other private equity firms to follow LDC’s lead, stating, “The midmarket gives consumers a choice. We deserve to be celebrated for that.”


It remains to be seen whether other private equity firm follow LDC and look for opportunities in the sector.


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