ECI books 2.5x return on IT company

ECI Partners, has agreed to sell CliniSys Group, a European IT provider for clinical laboratories, to UK-based Montagu Private Equity. 

The deal value was undisclosed but is understood to be about £100 million, according to a source close to the matter. 

The divestment will yield a 2.5x return for ECI, the firm said in a statement. 

ECI Partners acquired CliniSys Group in 2007 for £61 million. Since then, CliniSys has increased its sales, profits and headcount, Tom Wrenn, a partner at ECI, said in the statement. Under its ownership, ECI has helped CliniSys to “nurture sustainable growth and [to] significantly expand our international business, which now generates over half of our total revenues,” CliniSys’ chief executive Fiona Pearson added.

Jeremy Lytle, ECI’s investor relations partner, told Private Equity International that the firm was “delighted with the outcome”. The business, which was sold through an auction process, attracted a lot of interested parties, including other GPs, he said.  

Following this exit, ECI 8, a £255 million 2005-vintage, has now sold six of its twelve portfolio companies. Lytle declined to comment on the overall performance of the vehicle, but said “we are comfortable with where we are getting to”. He added that there would be more exits to come in the next six to 12 months. 

ECI is currently investing its £437 million ECI 9 vehicle, a 2008 vintage, which is approximately 65 percent deployed. In April, ECI invested in rail tour company Amber Travel. In December last year, it acquired a majority stake in Citation, an employment law consultancy firm, for £50 million (€62 million, $80 million). 

The firm may return to the fundraising trail next year, Lytle said. “If we hit the milestones of a couple of more deals to get us to about 75 percent, then there’s a high possibility [we will return to the market next year].” 

It is understood Montagu acquired CliniSys using its €2.55 billion Fund V, a 2010 vintage. Montagu declined to comment on how far the fund is deployed following the investment. 

Montagu hopes to benefit from the growth prospects of CliniSys, due to the rising volume and complexity of diagnostic decisions across public and private healthcare sectors. Demand is increasing because of a rise in diversified testing methods and an ageing population, according to the firm. It plans to further expand the business internationally. 

This is the first investment Montagu has made in 2013. However, the firm has been quite busy on the exit front: in June it sold Hansen Protection, a provider of specialist survival suits for extreme weather conditions, to IK Investment Partners, booking a return that was “over 2x”, according to a source familiar with the matter. 

In April, Montagu also doubled its money on Danish logistics company Unifeerder, which it sold to Nordic Capital. A month prior to that, Montagu landed a 3.5x return from ADB Solutions, an airfield lighting business, which it sold to Paris-based PAI Partners. In February, Montagu sold ghd, a company that makes hair dryers and straighteners, to Lion Capital for €300 million, generating a 3x return.