MKM Building Supplies (“MKM”), 3i Group plc (“3i”), LDC and Bain Capital Private Equity (“Bain Capital”) are pleased to announce they have signed a binding agreement for the sale of 3i and LDC’s stakes in MKM.

MKM Building Supplies (“MKM”), 3i Group plc (“3i”), LDC and Bain Capital Private Equity (“Bain Capital”) are pleased to announce they have signed a binding agreement for the sale of 3i and LDC’s stakes in MKM, the UK’s largest independent builders’ merchant, to Bain Capital. Management will retain a significant shareholding in the business.

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, 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.”

Proceeds to 3i from today''s transaction will be c.£70m, and including £11m received by 3i since 2006, represent a 5.9x money multiple. Proceeds represent a 17% uplift over book value at 31 December 2016 and 31% as at 31 March 2016.

The transaction is subject to customary 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.

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For further information, contact:

3i Group plc
Silvia Santoro
Investor enquiries
Tel: +44 20 7975 3258
Email: silvia.santoro@3i.com

Kathryn van der Kroft
Media enquiries
Tel: +44 20 7975 3021
Email: kathryn.vanderkroft@3i.com

LDC
Sophie Millward
Citypress
Tel: +44 7890 616 295
Email: sophie.millward@citypress.co.uk

MKM Building Supplies
Ian Middleton
Celicourt
Tel: +44 7885 508 527
Email: imiddleton@celicourt.uk

Bain Capital Private Equity
Edward Gascoigne-Pees
Camarco
Tel: +44 20 3757 4984
Email: ed.gascoigne-pees@camarco.co.uk

Notes to editors:

About MKM Building Supplies

MKM is the largest independent builders’ merchant in the UK and provides a one-stop-shop for branded building materials, timber, plumbing and heating, and a broad range of complementary categories including kitchens and bathrooms. Established in Hull in 1995 by David Kilburn and Peter Murray, MKM was built on the concept that skilled, local people who understand the needs of local customers, should serve the local trade. MKM is differentiated through its unique business model, centred around Branch Directors owning an equity stake in their branch and currently has 47 branches across England and Scotland, employing in excess of 1,100 people.

For further information, please visit: www.mkmbs.co.uk

About 3i Group

3i is an investment company with two complementary businesses, Private Equity and Infrastructure, specialising in core investment markets in Northern Europe and North America.

3i’s Private Equity team provides investment solutions for growing companies, backing entrepreneurs and management teams of mid-market companies with an EV typically between €100m - €500m. We back international growth plans, providing access to our network and expertise to accelerate the growth of companies across the consumer, industrials and business and technology services industries.

For further information, please visit: www.3i.com

About LDC

LDC is part of the Lloyds Banking Group and backs ambitious management teams from UK-based companies seeking between £2m and £100m of equity for management buy-outs, institutional buy-outs or development capital transactions. From a UK network of 9 regional offices, LDC invests in a broad range of sectors and has particular experience in Construction & Property, Financial Services, Healthcare, Industrials, Retail & Consumer, TMT, Travel & Leisure and Support Services.

For further information, please visit: www.ldc.co.uk

About Bain Capital Private Equity

Bain Capital Private Equity (www.baincapitalprivateequity.com) has partnered closely with management teams to provide the strategic resources that build great companies and help them thrive since our founding in 1984. Our global team of approximately 220 investment professionals creates value for our portfolio companies through our global platform and depth of expertise in key vertical industries including consumer/retail, financial and business services, healthcare, industrials, and technology, media and telecommunications. In addition to private equity, Bain Capital invests across asset classes including credit, public equity and venture capital, and leverages the firm’s shared platform to capture opportunities in strategic areas of focus.

Regulatory information

This transaction involved a recommendation of 3i Investments plc.