Gresham backs Sugar Lounge and Est Est Est founders in £18m buy-out of Individual Restaurant Company

Steven Walker, founder of Manchester's Sugar Lounge bar, together with Derek and Edwina Lilley, founders of the Est Est Est restaurant chain, have today secured a £18m funding package from Gresham and Lloyds TSB to roll out the Bar&Grill and Piccolino restaurants across the UK. The Individual Restaurant Company currently operates six restaurants, predominantly based in the North-West of England.

Derek and Edwina Lilley founded the Individual Restaurant Company after successfully selling Est Est Est to City Centre Restaurants in 1998 for £18m and will continue as shareholders and as part of the management team.

Gresham, the regionally based mid-market private equity house, is leading the £18m buy-in management buy-out (BIMBO) to fund the Individual Restaurant Company's expansion from its existing six sites to over 15 in the next three years, with debt funding from Lloyds TSB. Three new sites are expected to open during the course of this year.

The restaurant chain's management team will be headed up by Steven Walker, who recently sold his food business to the Irish food group Greencore for £18.4m, and Iain Donald, who has worked with the Lilley's since inception and will continue to run the operational side of the business.

The management team has been further strengthened by the appointment of Vernon Lord, formerly finance director of Inventive Leisure, who helped float and grow Inventive Leisure from eight sites to 40 over a period of four years. Richard Simpson, the former chief executive of Whitbread Restaurants, will be non-executive Chairman and Christian Bruning, Gresham investment director, will take a seat on the Board as non-executive director.

Steven Walker, chief executive of Individual Restaurant Company commented: "This is a very exciting deal. Gresham's financial backing will allow us to accelerate the rollout of our two successful concepts, Bar&Grill and Piccolino. We believe there is a significant opportunity to build a network of restaurants with an individual look and feel and a consistent approach to creating high quality cuisine in a contemporary environment."

Christian Bruning, Gresham investment director, said: "We are delighted to be backing this highly experienced management team, all of whom have a proven track record in creating successful restaurant businesses and shareholder value."

The Gresham team of Christian Bruning and Tim Whittard worked with David Raff and James Kerrigan of DLA as legal advisers. Ian Paterson and Peter Dawson from Grant Thornton completed financial due diligence and Jon Lake of Deloitte & Touche completed commercial due diligence.