Clear vision of the future
EYECARE specialist Duncan & Todd is planning to acquisition spree after agreeing to sell a majority stake in the business for £15 million to private equity firm LDC.
The deal with LDC, the private equity arm of Lloyds Banking Group, provides an exit for Business Growth Fund (BGF), which invested £5.6 million in the group in 2013 and a further £3.5m two years later.
The management team at Duncan & Todd, led by chief executive Frances Rus, said they would embark on the next stage of an “ambitious growth strategy to identify complementary acquisitions to further expand the business’ geographical footprint”. Ms Rus retains a “significant minority” stake in the business.
Colin Bennett, an investment director at LDC in Scotland, will join the board as non-executive director alongside chairman David Leatherbarrow, a former managing director of BUPA Dental.
Mark Kerr, director and head of Scotland at LDC, said the firm was backing “a strong and ambitious management team with a clear vision and growth strategy”.
This deal represents BGF’S second successful exit in Scotland, following the acquisition of portfolio company Stevenswood Doors and Windows by Polyframe Trade Centres in 2016.
BGF did not disclose how much it realised from the sale of its stake, but confirmed it was a “positive exit”.
Ms Rus has overseen the growth of Aberdeen-based Duncan & Todd since leading a management buyout in 2007 from founders Stewart Todd and Norman Duncan, her ex-husband.
Over the past decade the business has invested heavily in its manufacturing capability and opened 28 stores stretching from the central belt to the Highlands. In 2015, it acquired the 2020 Optical chain, which has branches in Glasgow and Edinburgh.
Ms Rus said: “With BGF’S support we have made significant progress over the past five years and we’re now at a pivotal point in our growth journey.”
She added: “LDC’S investment will provide both the financial backing and strategic support to allow us to expand capacity in some of our existing stores, roll out audiology nationally and make selective further acquisitions, helping us to take Duncan & Todd to the next level and bring our market-leading services to a larger customer base.”
In its most recent accounts, for the year to March 2017, Duncan & Todd (Group) posted revenue of £16.7m, up slightly from £16.45m the previous year. The business made a pre-tax loss of £459,633, widening from £257,219 the previous year.
At the time, Ms Rus said the accounts “reflect the reality of the investment mezzanine finance structure.”
This structure means BGF and other shareholders also hold junior debt totalling £7.4m. This will now be paid off.
Founded in 1972, the business operates three divisions – retail, manufacturing and corporate.
It employs more than 250 people across its branch network – which includes shops operating as 2020, Douglas Dickie and JM Mcdonald - and at its ophthalmic lens laboratory, Caledonian Optical in Aberdeen. Duncan & Todd also claims to be the only family-owned optical group in Scotland with a propriety lens.
It also provides outsourced corporate eye care services to more than 200 public and private sector customers, through its Smart Employee Eyecare brand.
Following the investment, the group plans to roll-out new complementary healthcare services including audiology following the appointment of Duncan & Todd’s first head of audiology with further growth planned in this team.
Patrick Graham from BGF said: “Duncan & Todd has put our funding to work through its acquisitive growth strategy and investment in fixed assets. As our seventh investment in Scotland, Frances and the company are a valued member of our alumni and we wish the business well.”
LDC’S investment will help us to take Duncan & Todd to the next level