Fast-growing wholesaler Kitwave is close to securing investment to allow it to continue its acquisitive buy-and-build strategy.

Majority shareholder and founder Paul Young is understood to be in the process of significantly increasing his 56% holding in the business, with private equity firm NVM seeking an exit after four years.

A deal is close to being completed for NVM’s 40% stake, for which it paid £7.5m in 2011, with KPMG advising Kitwave on its search for additional external funding to drive its second growth phase.

Kitwave was established in 1987 by Young as an acquisition vehicle to buy an established small confectionery wholesaler, M&M Value.

In 2006, Young set out on a strategy of consolidation to grow the business rapidly through acquisitions. Kitwave has since bolted on 11 businesses, six since NVM took a stake in 2011, growing revenues from £17m to £227.8m in the year ended 30 April 2015 - a 15.5% hike on 2014.

EBITDA at the group, which supplies independent c-stores from 15 depots across the UK, as well as operating the My Store fascia, has risen more than three-fold since 2006 to £7.1m.

Having overseen the growth of the business from a single North-East-based cash & carry to a national wholesaler, Young’s ambition is to establish Kitwave as a £500m trading entity.

“It has gone from booze, fags and confectionery into frozen and is building a broad portfolio offering to the indies,” a City source said. “It is in a very fragmented sector so there are plenty of targets to go after to keep accelerating growth.”

Kitwave made its latest acquisition in July last year, with the takeover of Hulleys Frozen Foods. It widened the group’s geographical reach and increased its customer base to about 30,000.

All parties involved declined to comment.

Source

Edward Devlin

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