The investors outbid Wyevale Garden Centres owner Terra Firma and plan to expand Dobbies' store numbers and online offer, while keeping the existing Edinburgh head office and management.
Andrew Bracey of Midlothian Capital, who has a background with Ocado, told HW Dobbies is "the best garden centre platform in the UK" because stores are purpose-built and not "converted glasshouses, which larger chains are based on".
The investors said Tesco "have had issues of their own", meaning Dobbies has been neglected. They tried to buy Dobbies last year and won an auction this month. "Perhaps we were seen as a good custodian for the business who will respect its Scottish heritage," they said.
Bracey said there is a clear platform for growth with Tesco having built 17 out of 35 Dobbies since buying it for £155m in 2007. Turnover per centre is above industry average at £4m-plus. He suggested Wick, Thurso, Fort William, Norwich, Thetford, Oxford, Newbury, Greater Manchester and Leeds as among the places that could support new Dobbies, adding that a lot of proposed supermarket sites are becoming free.
Hattington's Barney Burgess, who used to run Tesco.com, said "online has lagged behind". He added that some product looks "somewhat confused" and there would be "tightening around ranges" with "some light at the top end and some light at the entry end".
The investors said last year's £54m Dobbies write-down by Tesco was "accounting by Tesco not related to Dobbies at all". They said Dobbies had an existing "outstanding management team" who they want to keep, learn from and add to. They said Greenhill and Ernst & Young were clear in due diligence and gave full figures of eight previous years and three years of projections.
Bracey added that Dobbies can be the market leader in the garden centre sector and has "a superior team". Burgess said: "The prospects for Dobbies are excellent. It has significant potential for growth in an underserved and underdeveloped sector. This is one of the most exciting opportunities in British retail."
Bracey will be joined Aidan Clegg and Neil Currie of Midlothian Capital, as well as Burgess and Frederick Goltz of Hattington Capital, on the Dobbies board. The acquisition has received financing from Ares Capital Partners. The acquiring group was advised by Rothschild and Slaughter & May. Fladgate also advised the equity investors.
Wyevale Garden Centres owner Terra Firma planned to buy Dobbies but failed to win the auction. Terra Firma founder Guy Hands abandoned a costly £1.5bn fraud claim against Citigroup this month but said he still has funds to spend.
Former Wyevale Garden Centres chief executive Nicholas Marshall said: "Great news for customers, great news for everyone who works for Dobbies, great news for Andrew Bracey and Midlothian and Hattington and great news for the garden centre industry. A sad day for poor Wyevale and a disaster for Guy Hands."
Retail consultant Andy Newman said: "On balance this looks like good news for the sector as it will retain a level of healthy competition among the bigger chains. It will be interesting to see what Midlothian and Hattington announce over the next few days in terms of key personnel, especially whether Andy King will stay as managing director.
"I'm not totally surprised that the business has been sold to Scottish-based investors as I suspect Tesco may have been uncomfortable with recent speculation that Dobbies head office in Lasswade would close if Wyevale had taken control - if everything else was equal in the bids this may have proved to be a factor in the final decision."
Retail consultant Neville Stein said: "I don't think it's a surprise that Dobbies have been bought by an investor group as we know that those in the venture capital world see a lot of value in the garden centre industry, so I am encouraged to think that others outside the industry see enormous potential in garden retail.
He added: "The new owners say that they are looking to grow the business across the UK. Now this is very interesting. Are they looking to grow the business organically - take what they have and grow sales and profit - or looking to grow the business through mergers and acquisitions, or indeed build new stores? I would hope that they would create more capacity in the market by building new stores."
Simon Quinton Smith of Quinton Edwards said: "The purchase by this new group is good for the garden centre industry, good for suppliers and will allow greater competition and more investment in the sector."