London-based private equity firm Doughty Hanson has paid €350 million to purchase Equity Trust Holding, an administration and fiduciary services provider, from Candover Partners, the UK private equity firm which recently announced it would cease operations.
The sale will earn Candover a 1.5x return on its initial investment, made in 2003. It represents a 24 percent increase in the businesses’ valuation, which Candover acquired as part of a management buyout worth €183 million.
It marks the first exit since the firm revealed last week it planned to wind down its portfolio and its listed parent, Candover Investments.
With the sale of Equity Trust, Candover now has three investments left to be realised in its €2.7 billion 2001 fund, which made a total of 16 investments, according to the firm’s website. Its 2005 fund made 12 investments and its 2008 fund made one, of which approximately 12 remain on Candover’s books, according to the firm’s website.
For Doughty Hanson, the deal puts the firm’s 2007 Fund V, which raised €3 billion, at the 50 percent
Other private equity firms had demonstrated interest in the business, but Doughty had a trump card due to the fact Equity Trust’s management team were keen on joining forces with TMF
It plans to merge Equity Trust Holding with portfolio company TMF group, a management and accounting services provider acquired for €750 million in 2008.
“Other private equity firms had demonstrated interest in the business, but Doughty had a trump card due to the fact Equity Trust’s management team were keen on joining forces with TMF,” Mark Corbidge, co-head of private equity at Doughty Hanson, told PEO.
He added Doughty ultimately prevailed because the firm perceives Equity Trust as exhibiting ample growth potential.
“The rapid pace of globalisation, combined with growing and increasingly complex regulation, is driving an outsourcing trend amongst organisations that are keen to focus on their core competencies and increasing their transparency and corporate governance,” Corbidge stated.