Building materials distributor IBMG attracts new investors

Independent Builders Merchant Group (IBMG) has secured new investment from Ares Management and Farallon Capital Europe.

The raise was supported by founding sponsor Cairngorm Capital Partners, giving the East Sussex-headquartered building materials distributor a solid platform for continued growth, new market entry and further M&A activity.

IBMG has experienced strong growth since inception, posting revenues of over £650 million in 2023. It now has 182 branches throughout the South, stretching up to the Midlands.

It puts its success down to strong, locally established merchanting brands which provide best-in-class service to loyal customers, while benefiting from an integrated and sophisticated centralised infrastructure.

Despite the challenging market in 2023, IBMG was able to improve its trading margins, contrary to performance across much of the sector.

It says the continued support of Cairngorm Capital – and backing from new partners Ares and Farallon – will help accelerate its current initiatives.

That includes the launch this year of new customer propositions in renewables and sustainability, while IBMG looks to expand its independent brand network through new branches and M&A where strategically appropriate.

CEO Martin Stables said: “The IBMG business model is special and unique in the sector.

“With five specialist divisions, we can take any project from the ground to the roof ridge and ensure it’s supplied via an optimised supply chain minimising the miles travelled.

“At a project level, this ensures that the end result is both sustainable and incredible value, because IBMG helps to minimise wasted resources inherent in other supply chains.

“The new funding partnership delivers additional capital for growth, providing IBMG with greater financial flexibility, allowing for continued investment.

“Looking to the second half of this year and beyond, medium-term macroeconomics look very favourable for our sector.

“Thanks to the extraordinary hard work by our teams, along with all our partners and stakeholders, we’re well placed to deliver on the IBMG vision for even greater success.”

Andrew Steel, managing partner at Cairngorm Capital, added: “Despite the economic uncertainty of the last 12 months, IBMG’s investment thesis has been strong and continues to meet all our objectives.

“IBMG has achieved sustained success since our initial acquisition in 2018, becoming the largest independent building supplies merchant in Southern England in under four years.

“This partnership will maintain its strategic trajectory.

“We’re delighted to welcome Ares and Farallon as we embark on the next chapter of growth for IBMG.”

Ares partner James Kim added that he was ‘thrilled to partner with Cairngorm Capital and IBMG’ and impressed by the company’s talented management team and performance.

And Philipp Strepp, MD of Farallon, noted the firm’s resilience in recent months and expressed confidence that it would ‘continue to consolidate its part of the market’.