NorthEdge buys stake in Arthouse from Total Capital Partners

Secondary buyout signals successful exit for Total Capital.

Arthouse today announced that it has completed its second management buyout. The Rossendale headquartered company took itself independent in 2007, securing backing from the team at Total Capital Partners (“Total Capital”).

Total Capital is an independent firm that specialises in providing combined equity and debt funding for small and medium-sized businesses in the UK. Moving forward, the management team will be backed by NorthEdge Capital, which has acquired a majority stake in the business.

This marks the fourth and final exit for Total Capital’s first fund, a 2006 vintage fund that has delivered an overall return of 1.9x.

In line with its differentiated approach to funding SMEs, Total Capital provided all the debt and equity needed to back the company’s first management buyout, which was led by Managing Director Anita Kenyon and three company directors in November 2007.

Since then, the business has delivered impressive growth, increasing its annual turnover from £17 million to £25 million and its employee base from 37 to 65 people.

Since becoming independent, the management team has worked with Total Capital to diversify its product lines, sales channels and supplier base, and to expand its network of stockists internationally.

With the support of NorthEdge, the firm will further strengthen its presence in the UK, and expand into overseas markets, in particular the US and Middle East.

>See also: Funding Circle acquires German SME lender Zencap

It is also aiming to enhance its digital offering, and make further bolt-on acquisitions, with focus on other companies in the UK targeting overseas markets.

Jon Pickering, director at NorthEdge Capital, said that securing the investment in Arthouse “demonstrates the skills of the team at NorthEdge in originating off-market private equity transactions”.

“[Also] delivering wider funding opportunities for entrepreneurial businesses across the North of England. We have also been able to make use of our extensive network who worked alongside us to support us on this transaction,” he continued.

“It is great to be working with Anita and the management team – they are entrepreneurially minded with a comprehensive understanding of the market in which they operate.

“They have clear aims and solid plans for the future, and their excellent track record means that they are ideally positioned to target growth. With recent trends indicating that the favourable economic climate has prompted renewed interest in the home furnishing and decoration sector, this is an opportune time for the team to set its plans into motion, and we are all excited to support the team on the delivery of further successes.”

Natalie Eastham, a founding partner of Total Capital and non-executive director of Arthouse, added the team has “done a fantastic job of leading the company through its first years of independence”.

“Our exit from Arthouse is all the more significant for us as it marks the fourth and final realisation from our first fund,” he continued.

“We are delighted with the performance of this blended debt and equity fund, which has provided our investors with an attractive alternative to the typical leveraged equity model, access to an appealing segment of the market and a swift return of capital.”

Further reading: Highland Europe launches $332m fund

Praseeda Nair

Kellen Rempel

Praseeda was Editor for from 2016 to 2018.