Benchmark Capital, the venture capital firm that focuses on technology investments in the US, Europe and Israel, is to back an E80m public-to-private bid for Irish electronic transaction development company Alphyra Group.
Benchmark is backing Rendina, a company owned by John Nagle and John Williamson, the CEO and CFO respectively of Alphyra, which has made a E2.45 per share offer for the company, valuing the company at just over E80m.
The offer values each Alphyra share at E2.45 in cash and represents a premium of approximately 58 per cent above the closing price on 5 November 2002, the last dealing day prior to the announcement of a possible offer for Alphyra by management. Benchmark Capital has agreed to invest E30m for shares in Rendina and to lend up to E34m to Rendina under a convertible bridging facility. In addition, bridging loan facilities of E15m have been made available by IIB Bank.
In a statement to the stock exchange, Alphyra confirmed that it had received an approach from another party expressing an interest in the company. The company did not disclose whether this offer was from a trade or a financial buyer.
Barry Maloney, leading the deal for Benchmark, said that Benchmark was approached by Alphyra management earlier this year. “This is our first public-to-private deal but we were impressed by the company’s management team. Our interest in PTPs is purely opportunity-driven. It is not a change of direction for the business.”
In its interim results for the six months to 30 June 2002, Alphyra announced turnover of E23.8m and a loss before tax of E3.0m.
Maloney believes that there will be a growing trend for PTPs in the technology and software sectors as valuations continue to fall. “Once companies fall below the E100m level, brokers and institutional investors lose interest. Given the current market, there are likely to be similar deals in this sector.”
Venture capital firms have recently struggled to justify their large billion dollar funds raised at the height of the technology boom. Benchmark was one of a number of VC firms to cut back their funds this year, the most recent of which was Atlas Venture, which this week cut its sixth fund by 37 per cent to $600m.