Gresham makes successful exit from office2office

Gresham-backed office2office, the office supplies group, has listed on the main market of the London Stock Exchange valuing the business at £65m.

Gresham initially invested £6.5 million in the £10 million buy-in management buy-out (BIMBO) of the business in December 2000 and over the life of the investment Gresham realised over 7x money and 83% IRR, including yield. Gresham has realised its entire stake in the flotation.

office2office is the leading independent contract supplier of office goods in the UK and offers its customers a one-stop-shop service with next day delivery. Its largest client is the Ministry of Defence. office2office also supplies a number of blue-chip companies, including Barclays Bank, MacDonald's, Sainsburys and PricewaterhouseCoopers.

It was privatised out of HMSO in 1996 and began trading under the name Banner Business Supplies before the BIMBO. At the time of Gresham's investment, revenues were at £82 million with the broker's forecasting a rise to £143 million in 2004. Operating profit before exceptional items and goodwill amortization is forecast by the brokers to reach £9.6m from breakeven over the same period.

Neil Scragg, the Gresham investment director who led the original deal, said: "We are delighted at the success of the flotation and the fantastic return on our investment vindicates the faith we had in the management team and its vision for the business. The key catalyst for the growth was the introduction of Ray Peck as the new CEO who with the original team delivered the excellent improvement and sales growth."

James Barbour-Smith, Gresham's portfolio director and formerly a non-executive director of office2office, said: "The success of the flotation is particularly impressive given the difficult market conditions. This is a proven management team and business model that is well set for the quoted environment."

Ray Peck, chief executive of office2office, said: "It has been a great pleasure to work with the Gresham team on both a professional and personal basis. From the time of the initial investment, through the handover to the portfolio team and up to the IPO Gresham has been a committed and valuable partner."

Hawkpoint Partners were office2office's sponsor and financial adviser, and Panmure Gordon were the brokers.