Celtic Linen, a supplier of rented linen to hospitals and hotels, has been sold for €31.5m to Johnson Services Group, an AIM-listed UK laundry provider, equating to around three times the figure invested by sellers Causeway Capital Partners.
Causeway Capital Partners, a private equity firm backed by the Ireland Strategic Investment Fund, had acquired Celtic Linen out of examinership in December 2016 for €4m. It is understood that a further €4.5m was invested in the years that followed.
Celtic Linen operates two laundry plants in Ireland and is led by CEO Joanne Somers. As part of the transaction, JSG has agreed to complete an ongoing €1.9m capital investment programme in the group’s Wexford plant to increase efficiency and improve sustainability through reduced energy usage.
Since the acquisition, Celtic Linen has completed a major capital investment programme, a bolt-on acquisition, and sales have grown from £12m (€14m) to more than £29m, employing 350 full-time equivalent staff. The acquisition successfully secured 270 jobs at the company’s headquarters in Wexford. Celtic Linen’s other shares were held by employee shareholders, including Somers, who will remain with the business.
Causeway Capital Partners is a major shareholder in Patisserie Valerie, a bakery coffee retailer. The private equity fund exited ecommerce business, In the Style, in 2021 following its IPO.
The deal has crystallised a strong return for Causeway Capital’s investors. Scaife, one of Causeway’s founders, said, “We are delighted to have secured JSG as the new owner of Celtic Linen.” JSG has agreed to complete the ongoing €1.9m capital investment programme.
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Frequently Asked Questions
Causeway Capital’s Return on Investment for Celtic Linen
Causeway Capital tripled its return on investment for Celtic Linen, a linen rental and laundry business based in Wexford, Ireland. The private equity firm bought the business out of examinership for €4 million in 2016 and sold it for €31.5 million in 2023, resulting in a return of more than three times its original investment.
Factors Contributing to Causeway Capital’s Success with Celtic Linen
Causeway Capital’s success with Celtic Linen can be attributed to several factors, including a strong management team led by CEO Joanne Somers, a focus on operational efficiency, and a strategic investment in technology to streamline processes and improve customer service.
Comparison of Causeway Capital’s Return on Investment for Celtic Linen to Industry Averages
It is difficult to compare Causeway Capital’s return on investment for Celtic Linen to industry averages, as the linen rental and laundry business is a niche market. However, Causeway Capital’s success with Celtic Linen demonstrates the potential for private equity firms to generate substantial returns on investment in smaller, specialized businesses.
Current State of Celtic Linen’s Business
Following its sale to a new owner, Celtic Linen remains a leading supplier of rented linen to hospitals and hotels in Ireland. The business is expected to continue operating under its current management team, led by CEO Joanne Somers, and to pursue further growth opportunities in the Irish market.
Causeway Capital’s Investment Strategy for Companies Like Celtic Linen
Causeway Capital’s investment strategy for companies like Celtic Linen involves identifying undervalued or distressed businesses with strong growth potential and providing strategic and operational support to drive growth and profitability. The firm typically invests in businesses with enterprise values of between €10 million and €100 million.
Impact of Causeway Capital’s Success with Celtic Linen on the Investment Community
Causeway Capital’s success with Celtic Linen is likely to have a positive impact on the investment community, demonstrating the potential for private equity firms to generate significant returns on investment in smaller, specialized businesses. This success may encourage other investors to consider similar investments in niche markets.
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