Duncan & Todd takes £15m investment from private equity investor

Scottish optical provider The Duncan & Todd Group, has secured a £15m investment from the Scottish office of LDC, the mid-market private equity investor, to accelerate its growth strategy. As part of the deal, Duncan & Todd’s existing backer, BGF, will exit its minority stake.

Founded in 1972, the business operates through three divisions – retail, manufacturing and corporate – and employs more than 250 people across its national branch network and at its state-of-the-art ophthalmic lens laboratory, Caledonian Optical in Aberdeen. It also provides outsourced corporate eye care services to more than 200 public and private sector customers, through its Smart Employee Eyecare brand.

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Chief executive Frances Rus has overseen the growth of Duncan & Todd since leading a management buyout in 2007. Since then, and with investment from BGF, the business has invested heavily in its manufacturing capability and successfully expanded its national footprint from its original base in the North East of Scotland to 28 stores stretching from the Central Belt to the Highlands, including the 2020 Optical chain in Central Scotland. For the financial year ending 31 March 2017, Duncan & Todd generated more than £16m of revenue and profit (EBITDA) of more than £2m.

BGF, the UK’s most active investor of patient capital for entrepreneurs and growing business, has backed Duncan & Todd since 2013. This deal represents BGF’s second successful exit in Scotland, following the acquisition of portfolio company Stevenswood Doors and Windows by Polyframe Trade Centres.

With LDC’s investment and support, the management team will embark on the next stage of its ambitious growth strategy to identify complementary acquisitions to further expand the business’s geographical footprint and 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.

Frances Rus, chief executive of Duncan & Todd, 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. 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.

“I’m looking forward to our partnership with LDC as we realise the growth ambitions of the business together.”

The transaction was led by director Mark Kerr and investment director Colin Bennett at LDC in Scotland, and Colin will join the board as non-executive director alongside non-executive chairman David Leatherbarrow. As former managing director of BUPA Dental, David brings more than 25 years’ experience of driving growth at healthcare-focused retail business.

Mark Kerr, director and head of Scotland at LDC, added: “Duncan & Todd has established itself as Scotland’s leading opticians. Under Frances’ leadership and with funding from BGF, the company has invested strategically in its manufacturing capabilities and identified the opportunity to add audiology to its current optical services.

“In Duncan & Todd, we are backing a strong and ambitious management team with a clear vision and growth strategy. We look forward to supporting the business as it embarks on the next phase of its expansion.”

Patrick Graham, 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 in the next stage of the journey with LDC.”

The Scottish market for optical goods and services is forecast to grow at a CAGR of 3.1 per cent between 2016 and 2021, from a market value of £253m to £291m.

LDC was advised by Blackwood Partners, KPMG, and Armstrong.

Duncan & Todd was advised by CMS Cameron McKenna Nabarro Olswang LLP and Sentio Partners.

Banking facilities were provided by RBS.

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