LDC Looks To Tonic Of £150m Fever-Tree Sale

Fever-Tree, the maker of premium drinks mixers, is preparing to toast a change of ownership that could involve a London Stock Exchange (Other OTC: LDNXF - news) flotation.

Sky News understands that LDC, the buyout division of Lloyds Banking Group, is poised to called in bankers from Investec (LSE: INVP.L - news) to oversee a review of its investment in Fever-Tree.

The private equity group is expected to consider options including selling part or all of its shareholding through a conventional sale or public listing, a source said.

Fever-tree was set up in 2005 by Charles Rolls and Tim Warrillow with the aim of creating a new drinks category aimed at exploiting consumers' growing willingness to buy higher-quality products.

LDC invested £48m in Fever-Tree in March last year in return for an undisclosed stake in the business.

Sources suggested on Monday that the company, which is one of Britain's fastest-growing drinks exporters, could now be valued at approximately £150m.

Fever-Tree is the biggest-selling premium mixer brand in the UK, where the market is estimated to be worth around £320m.

It also has a significant presence in Spain, which has one of the world’s biggest gin and tonic markets, and the US, the largest market for premium spirits, cocktails and mixers.

Fever-Tree expects to grow sales annually over the next couple of years by around 25% average in the UK and Spain, and by more than 50% in the US.

“We did some research (into the market) but a lot of this is driven by the fact that people are drinking less quantity but better quality," Mr Rolls, a former director of Plymouth Gin, told the Financial Times last year.

"This had happened in beer, in wine, in whisky. This convinced us that there was a market but we didn’t know how big a market."

News of LDC's review of its Fever-Tree investment comes days after Sky News disclosed that the buyout firm has itself been the subject of recent takeover interest.

A division of Goldman Sachs (NYSE: GS-PB - news) recently made an approach to acquire LDC's London operation, which was rejected, triggering the departure of Daniel Sasaki, one of its top executives.

“LDC is a core part of Lloyds Banking Group’s support for SME and mid-market companies and it has a consistent track record of private equity investments in UK SMEs and the mid-market, having invested more than £1.5bn over the last five years to support ambitious businesses’ growth,” an LDC spokesman said last week.

The Lloyds private equity unit, which also backs companies such as the retailer Joules and Imagine Nation, a media content producer, was one of Europe's most prolific investors last year, buying stakes in 26 businesses.

Darryl Eales, LDC's chief executive, resigned from the role before the Goldman approach but remains as an employee, sources said.

Mr Sasaki was one of the LDC representatives on the board of Fever-Tree when the investment was made.

An LDC spokesman declined to comment.