• Innovate is a fast-growing school catering business that serves 120 schools in England
• Healthier eating in schools drives better behaviour and attainment, while helping to combat the growing scourge of childhood obesity
• Bridges’ investment will support the management team to expand to new schools
• Innovate has committed to become an ‘Impact Organisation’, promoting healthier lifestyles and sustainability in schools and beyond

Bridges Fund Management (“Bridges”), the specialist sustainable and impact investor, has invested £8.5m to take a majority stake in Innovate Services Ltd (“Innovate”), a fast-growing school catering business that provides high-quality, nutritious food to over 90,000 children at primary and secondary schools in England.

The Bridges team actively targeted the school catering sector, driven by the belief that it offers an outstanding opportunity to drive better health and education outcomes for children alongside strong commercial performance. One in every three 11-year-olds is now overweight or obese – a number that’s rising all the time – and obese children are much more likely to become obese adults, with all the negative consequences this has for physical and mental health. Promoting healthy eating in schools helps to combat obesity and fosters better long-term eating habits.

Crucially, studies also suggest that children who eat healthier, nutritionally-balanced meals are more alert, better-behaved and more likely to perform well in school. As a result, schools and academy groups are increasingly on the look-out for specialist partners who can offer higher-quality, better value-for-money alternatives. This market is now worth over £2bn a year, spanning 22,000 schools and some 8.3m students – creating a large opportunity for a best-in-class operator.

Through detailed analysis of the sector, Bridges identified Innovate as an attractive platform investment with clear growth potential. Innovate currently serves around 75 secondary schools in England, using some of these as a base to serve another 45 local primary schools. But it doesn’t just provide delicious, nutritious food: it also works with its partner schools (through events, school councils and parents’ meetings) to promote the benefits of healthy eating. The quality of this proposition typically leads to a large increase in take-up of school meals (which has been in long-term decline since the 1970s) and a corresponding reduction in schoolchildren relying on often unhealthy lunch boxes.

Bridges approached management directly, and it quickly became apparent that both parties shared a similar commercial and impact vision for the business – enabling this investment to be completed off-market. Bridges will now work with and build the management team, led by Geoff Peppiatt, to scale the platform and deepen Innovate’s impact focus.

Geoff Peppiatt, Executive Chair of Innovate, said:
“Our core purpose is, and always has been, to ensure that young people can enjoy high-quality, nutritious food in their schools and colleges. But beyond that, we believe we should do whatever we can to create a better world. Bridges has long been a leader in impact investing, and we felt they really understood our values and our vision for the business. With their support, we’re committing to the goal of becoming an ‘Impact Organisation’: working within the school and wider community to encourage healthier lifestyles, positive employment practices and sustainability.”

Emma Thorne, Investment Manager at Bridges Fund Management, said:
“Having identified school catering as an attractive sector, we approached Innovate because we felt they were one of the best operators in the space. So we were delighted to find that they shared our view of the growth and impact potential of the business, and we’re excited to be working with management to take Innovate to the next level. This is another great example of a high-performing business whose focus on impact underpins its competitive advantage – making Bridges a natural investment partner for this next phase of growth.”

This is the second deal the Bridges UK Sustainable Growth Funds team has completed since the start of the year, following the bolt-on acquisition of Fitness Hut by portfolio company Viva Gym last month.  Last year, Bridges also bought a majority stake in Just Ask, a facilities management business that specialises in working with housing associations. The team has extensive experience with roll-out and buy-and-build strategies through investments like Alina, the Hub Pharmacy, The Gym Group and the Vet.

Advisors:

Bridges: RSM (Financial), Parthenon EY (Commercial), Addleshaw Goddard (Legal)

Innovate:  Maitland Group, Lawrence Stephens (Legal)