FLUSHED with success after a £60m management buyout of Southampton to the Isle of Wight ferry operator Red Funnel, bosses say the company has never been in better shape.

"It's very much steady as she goes now," said managing director Alistair White.

The Bank of Scotland provided a £60m integrated debt and equity package to Red Funnel Group, allowing them to buy out venture capitalists JP Morgan Partners' stake in the company.

"JP Morgan were good owners but it is much more comforting to have a bank involved who are long-term players and are looking forward to continued growth in the future," said Mr White.

The deal is the result of five months of negotiations between the venture capitalists and the Bank of Scotland. JP Morgan bought the group from Southampton docks owners Associated British Ports for £71m in 2000.

Under their stewardship the company has recently completed a £10m programme of investment in new fleet capacity. Turnover for the year to December 2003 was £29.2m.

The Southampton-based group was founded in 1861 and employs over 400 people at sites both on the mainland and on the Isle of Wight.

Mr White said the management buyout was good news for staff and customers.

"It is great for employees of Red Funnel who can look forward to a stable relationship and good future prospects.

"We have only recently had two vessels go to Poland for new decks and expanded capacity so customers can be assured of finding a place for the cars at peak times.

"The company has a proud and long history and this is the best stage we have been in recent years.

"I am excited about the future."

Red Funnel operates two ferry routes across the Solent using traditional roll-on, roll-off ferries between Southampton and East Cowes and high-speed passenger ferries to West Cowes.

Mark Hammond, director of Integrated Finance at Bank of Scotland, said: "Having tracked the growth of Red Funnel over a long period, we are delighted to have been able to help Alistair and his team take the future of the business into their own control."

Long-standing Isle of Wight homeowner and current non-executive chairman of Peacock Group PLC Gavin Simonds is to become a non-executive chairman upon final completion of the deal.

JP Morgan Partners director Wiet Stokhuyzen said: "Since leading the buyout in December 2000, JP Morgan Partners has been pleased to have been associated with Red Funnel.

"Under our ownership, the company has made significant investments in new capacity and has grown strongly.

"This has been an excellent investment."