Lomond Capital looks south as spending tops £10m
Edinburgh-based Lomond has so far acquired 21 businesses in the property lettings sector and is now working on its next expansion push following an investment this month from private equity firm MML Capital Partners.
To date the company has focused on acquisitions in Edinburgh, Aberdeen and Manchester and is already in discussions about acquiring more businesses in its existing markets. But the additional funding will help accelerate a move into the next cities on its hit list, Birmingham and Leeds, with a further two or three cities targeted for next year.
Stuart Pender, chief executive, said the firm is about to unveil details of its latest expansion plans but confirmed the investment this year would be “a multiple” of what had been invested by the company last year.
The scale of Lomond’s activity to date in the fragmented property lettings sector has been highlighted by the firm’s newly filed accounts which show that in the 14 months to 31 December turnover quadrupled to £9m compared with the previous year. The firm posted a pre-tax loss of £2.57m, up from £844,552 after costs more than doubled, but Pender stressed that had been a conscious decision to enable the business to “gear up” for the rapid expansion it was seeing.
Acquisitions made during the year included Edinburgh-based Alba Residential, bought for £368,000 in cash and £75,000 of equity.
Lomond also bought Aberdeen’s Yvonne Moir Property Services for £952,000 in a deal which added a further 300 properties to its stable in the North East. In Manchester it acquired businesses including Thornley Groves Estate Agents for £4.7m and Penny Ashton for £750,000.
Some of the increase in costs seen has been in building up its capability as an investment management business. Pender said although the company was mainly a property manager currently, it saw significant potential to position itself more as an asset management firm dealing with all aspects of property investment, from buying on behalf of investors to managing lettings.
Pender said that while there was a lot of interest in the market from large-scale institutional investors, the £900 billion private client market also offered huge opportunities for Lomond.
MML Capital, a European and US investor, bought a minority stake in Edinburgh-based Lomond earlier this month. Although the amount invested has not been disclosed, MML typically invests a minimum of around £8m in businesses. Lomond has also made a string of senior appointments in recent months including chief financial officer Mike McGill, who joined from Murray International Holdings (MIH), where he was group finance director.