Cabot Square books 5x return on KRS

The divestment of Key Retirement Solutions comes as the UK-headquartered firm is attempting to close its CS Capital Partners IV which came to market in 2011.

Cabot Square Capital has agreed to sell its majority stake in Key Retirement Solutions for £35 million to Phoenix Equity Partners. 

The sale, which also includes £2 million cash held on balance sheet, will generate a 5x return on invested capital, according to a statement. The transaction is subject to regulatory approvals and is expected to close in August. 

Cabot Square Capital invested in KRS, an over-55’s specialist adviser and distributor of equity release loans in the UK, in 2006. Under Cabot’s ownership, KRS has grown from an equity release loan broker into a provider of a broad range of financial services for people in or approaching retirement. The business has expanded its range of products and services. Since the investment, employee numbers have increased to 240 from 126. 

KRS has been a “fantastic success story over the last six years”, James Clark, Partner, Cabot Square Capital, said in the statement. “We are pleased to have supported KRS through its significant growth period to become the UK’s leading supplier of retirement services to the over 55s,” he said. 

Cabot made the investment using its CS Capital Partners II, a €284 million 2003 vintage, according to PEI’s Research & Analytics division. It is the third exit from this vehicle. The combined return from the three investments is 2.9x. The three exits represent an IRR of 35.7 percent. CS Capital Partners II has four remaining investments. 

Cabot Square Capital is attempting to wrap up fundraising for its fourth fund, CS Capital Partners IV, which held an undisclosed first close in 2011. The firm has so far collected $117 million, below its $200 million target, according to PEI’s Research and Analytics division.