Over the past three years, Wealth Club investors have invested nearly £3m in four MBOs (management buyouts) and £4.7m in nine property deals.
Within a month, two such investments – both arranged by Seneca Partners – were completed and returned capital and profit to investors.
Past performance is not indicative of the future. These are high risk and illiquid investments – you could lose all the capital you invest.
In August 2022, the sale of a purpose-built, fully leased property to Tesco for £10m generated a profit of around 20% in less than two years. It is, in our opinion, not easy to ensure a successful exit in these uncertain times.
Also in August, the first Wealth Club member-backed MBO – specialist textile wholesaler Whyte & Ivory – was successfully refinanced after record sales growth. The Wealth Club Investor Loan Notes were repaid in full with interest. Investors keep their stake in the company, so they could potentially realize further profits on exit – not guaranteed.
More details on each of these offers are below.
Real estate transaction – approximately 20% profit in less than two years
This deal, struck by Seneca Property in September 2020, was to buy a 4-acre supermarket and car park in Immingham, Lincolnshire. The site has been fully leased to Tesco under a 25-year inflation-protected lease.
Seneca had completed the £8.25m off-market deal in early April 2020, negotiating a purchase price well below estimated market value.
At the time of the investment, Seneca aimed to return investors 10% of their capital each year and sell the property in year five, with the aim of generating a capital profit at that point.
Less than two years later, however, in August 2022 the property was sold for over £10million. This sale is expected to result in returns of 1.2x net of all fees, which is well ahead of the timelines presented in the initial business plan.
Thus, an investment in September 2020 would have generated 10% capital repayments in 2021 and 2022 to date and a realized return of around 120% for investors in August 2022. Source: Wealth Club. Past performance is not indicative of the future.
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MBO agreement – repaid capital plus potential for further equity upside
Whyte & Ivory, based in Leicestershire, is a leading textile wholesaler and supplier of curtain linings and fabrics to international brands and retailers, covering the home and contract sectors.
In 2019, Wealth Club investors participated in the MBO deal led and organized by the private equity arm of Seneca Partners. The funding was intended to help the founders expand the company’s team and global customer base. Investor subscriptions included secured loan notes targeting a return of 10% per annum plus 30% participation.
In 2022, Whyte & Ivory achieved a record turnover of £10 million, with growth in both the UK – which also exports to the EU – and the US, through its subsidiary Whyte & Ivory LLC, based in North Carolina. In fact, over the past three years, sales in the United States have increased by 650%.
In August 2022, the investment was successfully refinanced. The loan notes were repaid in full with interest. Investors still retain their stake in the company, so they could potentially realize further profits on exit – not guaranteed.
Thus, an investment in 2019 would have generated 10% annual interest in 2020, 2021 and 2022 to date, with full repayment of the loan and interest in August 2022 with the equity still invested. Source: Wealth Club, August 2022. Past performance is not indicative of the future.