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12/05/2013

Finance Wales invests £600,000 in management buy-in at specialist coatings company

A £600,000 loan from Finance Wales has helped finance a management buy-in at a specialist industrial coatings company based in Chirk.

Experienced businessman Gavin Williams has combined the loan with his own capital to take over the reins at KG Coating Ltd (KG Coatings).

KG Coatings was established nearly two decades ago and its coatings help protect key components from corrosion in mission-critical environments. 

The company is a trusted sub-contractor to blue-chip clients in the aerospace, defence, electronics and engineering sectors, including Airbus, Boeing, Bombardier and Embraer.

It is also one of a small number of UK suppliers certified by Nadcap, the international aerospace and defence industry body.

“KG Coatings is a profitable global business with many long-standing clients and a reputation that’s second to none.  The company has grown significantly over the past 19 years and has potential for further growth both in the sectors it currently operates in and also in some new sectors such as oil and gas.  I’m now looking forward to driving the company forward,” Williams explained.

KG Coatings’ key markets are all set for long term growth.  Global demand for new aircraft is expected to grow significantly over the next twenty years while capital investment in the UK’s oil and gas industry grew by £3 billion to £11.5 billion in 2012 alone.

Having identified the opportunity at KG Coatings for Williams, David Plant of Proventure Consulting then introduced him to Finance Wales.

“I’d been keen to buy-into an established business for some time and this was the opportunity I’d been looking for.  I needed to work with an investor to help me make it happen and from the outset Finance Wales understood what I wanted to achieve.  They structured an investment package which would allow me to capitalise on the company’s existing strengths and also allow me to exploit some new opportunities,” Williams continued.

Nick Larcombe, Senior Investment Executive at Finance Wales, said: “Since 1994 KG Coatings has become a significant player in the development and manufacture of specialist coatings for a range of industrial uses. The company is ripe for further development and Finance Wales was pleased to back Gavin Williams to complete this buy-in.  He is an engineer with many years’ experience operating at director level and also has the conviction to see his plans through.”

David Plant, Head of Corporate Finance at Proventure Consulting said: “Finance Wales worked closely with Gavin and I to agree terms and smooth the transaction process.  This meant the deal completed quickly and enabled Gavin to fulfil his ambition to own his own business.  The funding package Finance Wales came up with will also provide the financial backing he needs to implement his growth strategy.  I look forward to seeing KG Coatings go from strength to strength.”

Stephen Jarman, Corporate Partner at Taylors also advised on the deal.  He said: “Whilst funds may not be flowing freely from the high street banks, it’s a good thing to see regional bodies and asset-based lenders having an appetite for deals.  I’m sure that Gavin will build on the success of the previous owners and take the business to higher levels.”

KG Coatings’ specialist coatings protect a diverse range of materials from corrosion. The company uses its extensive scientific and industry knowledge to come up with unique solutions for clients and often invents new products and processes to satisfy specific requirements.  KG Coatings currently employs 15 staff at its high-tech Chirk facility near Wrexham.

The investment was made from the Wales SME Investment Fund.