LDC Exits Cakesmiths with 3x Return

LDC, the private equity investor which is part of Lloyds Banking Group, has agreed to exit its investment in Cakesmiths to leading European player in frozen pastries and snacking products Onore (previously known as Boncolac).

During the two-year partnership, Cakesmiths secured high-profile client wins, significantly upgraded its digital platforms to almost treble revenue and EBITDA, whilst also investing heavily in headcount and operations.

Bristol-based Cakesmiths is an independent manufacturer of artisan handmade cakes. It supplies its award-winning range to customers across the UK through its direct-to-market online platform and through direct relationships with large independent coffee shops. The business caters to a wide range of palates, including a broad vegan and very-low gluten range, and prides itself on exciting innovation and its limited edition weekly ‘small batch’ runs.

LDC made a significant investment in Cakesmiths in March 2022 to back the management team’s ambitious growth strategy. With LDC’s support, the business has secured several high-profile client wins, invested more than £2m to scale its operations and invested heavily in sales and marketing, including a successful rebrand. Cakesmiths has also grown its e-commerce offering during the partnership, with online sales in H1 2023 more than double its online sales for the entirety of 2021.

Since LDC’s investment, Cakesmiths has increased revenue by 164% and EBITDA by 260% over a two-year period. The business has also continued to invest in talent across its organisation, and today employs more than 200 people, growing from 110 when LDC first partnered with the team.

The transaction, led by LDC’s Stefan Gunn and James Garland, generates a 3x money multiple return and IRR of 81% for LDC.

CEO Chris Ormrod, alongside the rest of Cakesmiths’ management team, will continue to lead the business, which will trade under its current branding as part of the Onore Food Group. Headquartered in France, Onore is backed by private equity investor Waterland and is a leading manufacturer and supplier of premium bakery products with plans to increase its footprint across Europe and other international markets.

Chris Ormrod, CEO of Cakesmiths, said: “It’s hugely satisfying to look back on everything we’ve achieved in the last two years, and we’re delighted to become part of the Onore Food Group – a move that will help our long-term growth ambitions. Demand for our amazing cakes shows no sign of slowing and we’re now perfectly positioned to share them with more people around the world as part of Onore.”

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Stefan Gunn, Investment Director at LDC, added: “Cakesmiths’ rapid growth is all down to the team’s passion for their cakes and commitment to innovation and service excellence. Together, we quickly identified the online platform as an essential channel to drive growth, and it’s wonderful to see it become an even more important part of the business’ offering, with almost 70% of Cakesmiths’ volumes being ordered online and delivered next day. It’s also been great to partner with the irrepressible Chris Ormrod again and also support a team based just down the road from our Bristol office. They are now ready to fly the flag for the city internationally, and we wish them every success.”

The transaction is expected to complete in January 2024.

LDC has a successful track record in the consumer sector, having invested nearly £600m into more than 30 businesses across travel and leisure, food and drink and consumer goods since 2012. LDC’s current consumer portfolio includes equestrian brand LeMieux, hospitality and leisure operator BOXPARK, premium milkshake brand Shaken Udder, outdoor adventure business ZipWorld and fine food manufacturer Bramble Foods.

LDC and Cakesmiths were advised by KPMG (M&A Advisor), TLT (Legal) and RSM Corporate Finance (Financial). Management advisers were UGCC (French legal), Trowers and Hamlins (UK Legal), KPMG (tax) and Momentum CF (management advice).

Source: LDC

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