Cluttons has been bought out of a pre-pack administration by turnaround firm RCapital and undergone a major restructuring.
The deal sees the world’s oldest practising firm of chartered surveyors, which currently employs 450 people, dispense of its £42.9m pension deficit.
The company’s pension liabilities, which it said in a statement had “become unsupportable in the long-term”, will now transfer to the Pension Protection Fund and existing pensioners and deferred members’ policies will be protected.
“Difficult trading conditions” have also had an impact on the company, in particular its transactional business, which it said it expected to continue for the medium term.
As a result of the restructure, Cluttons’ residential estate agency offices in Belgravia, Blackheath and Clapham will close, as will its global facilities management business and its operations in Nigeria.
A spokesman for Cluttons said it will now “focus on its more profitable areas, simplify its international and strengthen its core markets of London and the Middle East” and that “the corporate restructuring will allow Cluttons to continue to operate as normal and build a strong and flourishing business for the future”.
It added that it was working to preserve jobs across the business. Less than 20 UK employees have lost their jobs as a result of the deal, mostly from the three branches that have closed, only two of which were from the commercial side of the business and none at partner level. These individuals have been invited to apply for nine positions at other branches and no commercial teams have been closed as a result.
Cluttons will continue to be led by senior partner Steven Morgan and managing partner James Gray. RCapital plans to bring in a new chairman into the business and establish an operating board comprising existing Cluttons partners.
The company has produced strong operating profits in recent years, including £7.1m last year, but has been plagued by its pension liability. This has been exacerbated by the ageing population of its members and low interest rates, which have meant that returns on investments have been poor, leaving the company to make up the shortfall.
Who are RCapital
“We turn businesses around. We rebuild them and fix them. That’s our business.” Those are the words of RCapital chief executive Jamie Constable. spoken when the firm sold the Little Chef chain of roadside restaurants to a Kuwaiti investor in 2013.
The firm, set up in 2004, has made more than 50 investments in the UK and Europe and aims to provide commercial expertise and hands-on support alongside investment. It promises to take away immediate cash pressures and return a business to sustainable growth.
Past investments include Will Alsop’s Alsop Architects, which it bought out of receivership in 2004 before selling to SMC Group for £1.8m in 2006, and property consultancy DBK. Its current investments include The Harley Medical Group.
The private equity firm targets businesses with turnovers ranging from £5m to £200m that are looking for £2m-£20m of investment to turn them around.