Dunedin seals third exit in 6 months

The sale of etc venues delivers a 3x return on investment, providing further ammunition to the firm as it embarks on the fundraising trail

Edinburgh-based Dunedin Capital Partners has exited its third company this year with the sale of etc venues, a conference and training venues business, to UK private equity firm Growth Capital Partners. The sale follows Dunedin’s exit from WFEL and Capula to international trade buyers earlier in the year.

Dunedin held etc venues for six years and made a 3x return on its investment. Adopting the same strategy it used to develop Goal Soccer Centres, a private sector football operator it bought in 2000 and exited five years later, Dunedin increased the value of the business by implementing an expansion plan, according to Nicol Fraser, the Dunedin partner who led the deal.

“In both cases [we bought] a business with a small number of sites, and then identified a number of sites to be added on via a roll-out strategy,” said Fraser. In the case of etc venues, the number of sites was increased from five to 12.

Fraser explained that, somewhat counter-intuitively, the recession had created a niche for the company to expand. Cost-cutting had forced executives to move away from residential conference centres, where employees receive training out of town and stay overnight, and created a demand for daytime courses in London-based facilities. There was thus a gap in the market, which etc venues’ offering of centrally located, well-resourced venues managed to exploit. The company later expanded the business to Birmingham, with the opening of a new venue in 2010.

This third successful exit comes as Dunedin raises Fund III, which it launched in September targeting £250 million (€308; $402). The firm raised the same sum for Fund II in 2006.

Fraser agreed that the firm’s recent cash distributions would play well with investors considering a re-up. “For limited partners, there is a real consistency in terms of returns we’re getting from these businesses.”

He expressed confidence the fund would reach its £250 million target, despite it being the same as that of Dunedin’s Fund II, a pre-recession 2006 vintage.

For Growth Capital Partners, the etc venues deal represents its third investment in six months. Earlier this year, the firm backed the SBO of Igloo.com and the MBO ofExcelcior Technologies.

In other news, Dunedin this morning backed the management buy-out of Premier Hytemp, a supplier of engineered alloy components for the offshore and onshore oil and gas industry. The Edinburgh-based company was acquired from Murray International Holding for £34.5 million.