Leading garden centre group Blue Diamond expects to win investment of £60m to finance deals and build the business further.
Blue Diamond is raising the cash from Caledonia Investments, which will take a 16% shareholding in return.
The transaction, subject to AGM approval, is expected to allow privately owned Blue Diamond, which has 54 branches, to “seize the significant opportunity” it sees in the garden centre market.
The retailer said that £20m of the new money will fund share buybacks, while the remaining £40m would provide a “war chest for further store acquisitions and investment” in a fragmented market worth £5bn.
Caledonia has also agreed to make up to £40m of additional capital available “to support Blue Diamond’s development over the next five years, and to provide current shareholders with further share buybacks”.
Over the last five years, Blue Diamond has typically added four branches per year, and sales have climbed 90%. Last year, Blue Diamond’s sales climbed 19% to £395m, generating pre-tax profit up 44% to £31m.
Blue Diamond chief executive Alan Roper said: “We are delighted to welcome Caledonia as an experienced long-term partner, at an exciting point in Blue Diamond’s development.
“We are ambitious to seize the significant opportunity we see in the garden centre sector. Caledonia’s support will enable us to pursue the next phase of our growth without compromising the financial and operational discipline that has always been so crucial to our success.
“We also welcome the chance to provide our current shareholders with a liquidity opportunity that rewards their patience and support to date.”
Caledonia Private Capital head Tom Leader said: “Blue Diamond is exactly the type of business with which we look to partner – a clear market leader with an outstanding management team delivering excellent cash generation which can be reinvested to grow the business.”
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