PR.168
XX September 2010
Good call for Zeus
Independent private equity house, Zeus Private Equity (“Zeus”), has exited its investment in telecommunications provider, XLN Telecom (“XLN”).
ECI Partners has backed the management team in a secondary buyout of XLN for an undisclosed consideration. The deal has delivered a multiple of investment of 4.5x for Zeus. A number of unsolicited approaches generated sufficient
interest for Zeus and the management team to consider the sale, following three years of significant profit growth.
Based in Vauxhall, XLN was founded in 2002 by Christian Nellemann, following the deregulation of the UK telecoms sector. The company supplies fixed line, mobile and broadband services to more than 115,000 customers in the SME sector and is the UK’s largest independent telecommunications provider. As a result of the transaction, XLN will now have funds available to more than double the size of the business through acquisitions.
Zeus originally backed the management buy-out of XLN in January 2008,
investing £6.63 million to acquire a minority stake in the business. In March 2009, Zeus went on to support XLN’s acquisition of competitor, OneBill Telecom, with additional investment of £2 million. The firm now employs 180 staff at its head office and recorded a turnover of £54 million in the year to March 2010, revenues having grown substantially from £27 million in 2007.
Tony Dickin, partner at Zeus Private Equity, said: “XLN has been able to take advantage of a highly fragmented sector and position itself as a market leader in the SME telecoms space. Under the leadership of CEO Christian Nellemann,
XLN has experienced exceptional growth over the past two years and I wish the business all the best for the future in its partnership with ECI.”
XLN’s award winning management team, led by founder and Group CEO,
Christian Nellemann, will continue to lead the business following the transaction.
Christian Nellemann, founder and Group CEO of XLN, commented: “By taking a completely fresh approach, we have been able to transform a niche and
historically overlooked sector of the market. We have been able to achieve this by combining best quality products with best value pricing and industry leading customer service standards. As a result, we now have a highly profitable and scalable business that will allow us to rapidly expand the range of services we deliver to the small business market. We are delighted that ECI will be a key part of the business’s exciting next chapter given the opportunities for consolidation within our sector.”
Tom Wrenn, who led the deal for ECI Partners, added: “XLN is a superb growth business in a sector that has performed strongly during the recent downturn. It is led by a high-quality management team that has a clear vision for the future. XLN has considerable scope to add more products and services and is in an excellent position to act as a platform for consolidation in the fragmented telecoms market. We are delighted to be backing this excellent team and to provide additional capital to continue to grow the business.”
Ian Barton, corporate finance partner at Deloitte in Reading, provided corporate finance advice to Zeus, whilst Mark Dawson from the Manchester office of Shoosmiths provided legal advice. Neil Davies of KPMG provided vendor due diligence and Nick Jones, Dan Bowtell and Richard Shaw of Clearwater Corporate Finance in London advised the management team at XLN.
Press contact:
For Zeus Private Equity:
Alastair Henry/ Lauren Jones, MC2 0161 236 1352
[email protected] [email protected]
For ECI:
Piers Hooper, Sam Barton Equus Group
+44 (0) 20 7223 1100
[email protected] [email protected]
For XLN:
Toby Hall, Jonathan Kinsella GTH Media
+44 (0) 20 3103 3903
About Zeus Private Equity
Zeus Private Equity was formed in 2005 by Gary Tipper, Ed Fazakerley and Tony Dickin. The firm’s maiden fund, Zeus Private Equity Fund LP, closed in December 2007 at £100m.
From offices in Manchester, London and Bristol, Zeus Private Equity seeks to invest between £5m and £15m in established UK companies with an enterprise value of up to £50m. The investment team looks at opportunities and provides funding for MBOs, MBIs, acquisition finance, equity release and restructuring.
Zeus Private Equity portfolio comprises:
- Air Energi: international recruitment business specialising in the oil and gas industry (MBO)
- Electranet: specialist networking services supplier, primarily to public sector organisations (MBO)
- Hallmark Hotels: UK regional 4* hotel chain (equity funding for buy and build strategy)
- MJ Quinn: infrastructure services business providing electrical, mechanical and fire protection services to the London Underground and rail sector (SBO)
About XLN
XLN is committed to providing the lowest cost telecom services and highest customer service levels to the UK’s small business community. Founded in 2002, XLN is now the UK’s largest independent provider of telecom services to small businesses in Britain with over 115,000 business customers across the country. In 2007, XLN was ranked as the highest placed telco company in The Sunday Times Tech Track and was listed for a second consecutive year in 2008. In 2009, the company was a finalist in the Customer Focus Award category of the National Business Awards. In the same year, XLN
achieved CarbonNeutral® status, making it one of the first companies in its sector to earn this certification. During 2010, XLN has won a range of awards including a Global Business Excellence Award, a Best Company Award as well as being a named finalist in the Federation of Communication Services and Fast Growth Business awards. In 2010, Christian Nellemann, founder and Group CEO was a winner of the Ernst & Young Entrepreneur of the Year London & South region award in the Business Services category. This follows him winning the Ernst & Young Entrepreneur of the Year Award for Technology and Communication in 2006.
About ECI Partners
Originally founded in 1976 as Equity Capital for Industry, ECI is one of the longest established private equity groups in the UK. With offices in Manchester and London, and
a team of 21 dedicated professionals, ECI specialises in buyouts, buy-ins and development capital deals of £10 million to £150 million.
ECI is owned by its team and manages private equity funds with a capital base of over £880 million and has provided funds for over 250 companies.
In December 2008 ECI raised ECI 9, a £437 million fund and ECI’s ninth buyout fund. This fund exceeded the original £400m target in just three months with over 90% of the capital being committed by existing ECI investors.
ECI’s other notable investments in the Software and IT Services sector include Ascribe, Clinisys, ClarityBlue, GK Communications, Language Line, MM Group, NCC, OSI and Guardian iT.
