Cinven backed an experienced buyin team to acquire Stoves from Yale Valor in 1989. The business designed and manufactured freestanding gas and electric cookers in a market that was in decline. Stoves was underperforming and loss making which enabled the business to be acquired for nil consideration with Cinven providing the necessary working capital to effect a turnaround.
The management team’s first task was to restore Valor, as it was then called, to profitability. Its intention was then to develop a range of more modern, higher margin, British manufactured products to compete with high priced imports. Improvements in manufacturing processes were made and costs were cut. A particular emphasis was placed upon developing a modular design and construction technique.
As a turnaround, this was a relatively high-risk venture. The company performed well, reducing costs and reorganising its production facilities. Cinven’s investors continued to support the business through a substantial round of capital expenditure and an acquisition of a complementary business. In June 1995 Stoves was successfully floated on the London Stock Exchange.
Multiple returned on investment: 5x