LDC, a private equity investor under Lloyds Banking Group, has exited its investment in HSL Compliance (HSL), a prominent UK environmental compliance services provider, after a successful six-year partnership. IK Partners has announced that its IK Small Cap III Fund will invest in HSL, with the management team also reinvesting in the company. LDC will retain a minority stake in HSL alongside IK, which will take the majority ownership, to facilitate the company's ongoing growth. Financial details of the transaction remain undisclosed and are pending regulatory approvals.

Founded in 1976 and based in Herefordshire, HSL specializes in environmental testing, inspection, certification, and compliance (TICC) services. The company operates 19 offices across the UK and Ireland, employing around 650 staff to serve over 370 clients in various sectors, including food and beverage, manufacturing, healthcare, and education. Since LDC's initial £20 million investment in 2019, HSL has seen its pro-forma revenues increase fourfold to £77 million and its workforce double, establishing itself as a leading provider of comprehensive water hygiene and treatment services.

Under LDC's guidance, HSL has successfully executed a robust M&A strategy, completing 11 bolt-on acquisitions that have expanded its UK presence and client base. With IK's partnership, HSL aims to enhance its market leadership by delivering solutions that ensure client compliance and safety. IK's experience in TICC investments will support HSL's growth through both organic initiatives and further market consolidation.

Gavin Hartley, CEO of HSL, expressed pride in the company's growth and the solid foundation established through recent acquisitions. He emphasized the importance of the new partnership with IK in continuing their targeted buy-and-build strategy and expanding service offerings. Hartley also thanked LDC for their support over the years.

Tom Salmon, Partner at IK, noted their admiration for HSL's commitment to quality and service. He looks forward to collaborating with HSL's management to drive growth through effective buy-and-build strategies and operational enhancements.

The transaction was led by LDC's North West team, including Managing Partner Jonathan Bell and Investment Director Grant Goodwin. Bell highlighted the transformational journey HSL has undergone since its carve-out from Kiwa in 2019, noting the ambitious growth strategy and successful acquisitions that have positioned HSL favorably in a high-demand sector.

HSL and LDC received advisory support from Clearwater for M&A, DLA Piper for legal matters, OC&C Strategy Consultants for commercial due diligence, and KPMG for financial due diligence.