Apr 08, 2024

IBMG gains new capital investment from Ares Management and Farallon Capital to advance its strategic growth plans

IBMG is pleased to announce that with the support of its founding sponsor Cairngorm Capital Partners (Cairngorm Capital), it has raised additional capital investment from funds managed or advised by leading investment firms Ares Management Corporation (Ares) and Farallon Capital Europe LLP (Farallon). Attracted by IBMG’s clear value creation strategy and strong management team, the capital provided by Ares and Farallon creates a solid platform for continued growth, new market entry and further M&A activity.

IBMG has experienced strong growth since inception and has established itself as a standout builders merchant platform across the South of England, with FY23A revenue of over £650 million. IBMG’s success is born from strong, locally established merchanting brands providing best-in-class service to loyal customers, while benefiting from an integrated and sophisticated centralised infrastructure, which provides a unique winning proposition with the customer at its core. The continued support of Cairngorm Capital and backing from new partners, Ares and Farallon, will only help accelerate current initiatives.

Despite the challenging market in 2023, IBMG has maintained its relentless focus on customer service and been rewarded by gains in its market share and growth in its active customer base. Major initiatives to consolidate and enhance supplier partnerships, along with investments in people and pricing, have enabled IBMG to enhance its product mix and competitiveness while successfully navigating volume and deflationary pressures. The culmination of these efforts resulted in improved trading margins for the business, contrary to performance across much of the sector.

During 2024, IBMG will be launching new, exciting customer propositions covering Renewables and Sustainability. The business will look to expand its independent brand network through new branches and M&A where strategically appropriate.  For strong well-run platforms such as IBMG, with plenty of available capital, the opportunity for growth is clear, while elsewhere in the sector, the focus is on reducing costs, restructuring or juggling with the cyclical housebuilding market. IBMG is focussed on growing its offering for local trade customers who provide services to consumers looking to enhance their homes. This remains an highly attractive way to create strong value for beleaguered homeowners.

Martin Stables, IBMG’s CEO, said: “The IBMG business model is special and unique in the sector. With five specialist divisions we can take any project from the ground to the roof ridge and ensure it’s supplied via an optimised supply chain minimising the miles travelled, ensuring efficient delivery for the specialised trades on site, without the need for multiple suppliers and the complexity and delays that can cause. At a project level this ensures that the end result is both sustainable and incredible value because IBMG helps to minimise wasted resources inherent in other supply chains. Our focus remains the ‘repair, maintenance and improvement’ trade customer where we will continue to enhance our product and service offerings and increase the efficiency of the merchant brands that customers trust.

The new funding partnership delivers additional capital for growth, providing IBMG with greater financial flexibility, allowing for continued investment. Looking to the second half of this year and beyond, medium-term macroeconomics look very favourable for our sector. Thanks to the extraordinary hard work by our teams, along with all our partners and stakeholders, we are well placed to deliver on the IBMG vision for even greater success.”

Andrew Steel, Cairngorm Capital Managing Partner, explained “Despite the economic uncertainty of the last 12 months, IBMG’s investment thesis has been strong and continues to meet all our objectives. IBMG has achieved sustained success since our initial acquisition in 2018, becoming the largest independent building supplies merchant in Southern England in under four years. This partnership will maintain its strategic trajectory. We are delighted to welcome Ares and Farallon as we embark on the next chapter of growth for IBMG.”

Adam Watson, Investment Director, who leads Cairngorm Capital’s investment, noted “Securing further investment from such respected partners will ensure the business is in an advantageous position as economic conditions improve during 2024 and competitors entrench. IBMG’s performance has proven robust during challenging markets, while management remains agile and proactive in seeking growth opportunities and disrupting new markets.“

James Kim, Ares, Partner, said “We are thrilled to partner with Cairngorm Capital and IBMG to support the company’s next phase of growth. We are impressed by IBMG’s talented management team and performance since inception which speaks to their strong market positioning and high-quality operations. In addition to the funding provided, Ares looks forward to sharing its operational and strategic resources to help support IBMG accelerate value creation for all stakeholders.”

Philipp Strepp, Farallon, Managing Director, added “We are excited by the partnership with IBMG, the firm has proven resilient in recent months, has an excellent leadership team, great brands and a focus on what matters to their core customers. We are delighted to support IBMG’s team on what is a clear strategy to deliver a best-in-class customer proposition and continue to consolidate their part of the market.”

For further information relating to IBMG, please use info@independentbm.com
For further information relating to Cairngorm Capital please contact Katherine Ritchie on 020 8347 6183