ECI sells hotel dotcom for nine times return

ECI Partners has made more than nine times its investment on an online hotels company after selling the business to First Choice Holidays for £108 million.

ECI Partners, a UK mid-market buyout specialist, has sold LateRooms, an online hotels specialist, to First Choice Holidays, a travel company, for £108 million (€160 million; $210 million). ECI has generated an internal rate of return of more than 500 percent and a multiple of more than nine times its original investment two years ago.

LateRooms: discount online hotel bookings

ECI funded the buyout of LateRooms in December 2004.  The enterprise value of the company was £25 million, according to a source familiar with the deal. 

David Ewing, partner at ECI, declined to comment on the price paid, but confirmed ECI held a majority share of 54.3 percent while the founders retained the remaining equity.

Ewing said: “The business has grown handsomely and there was a lot of interest so we thought we would get a good price.  Expedia were very interested, as well as private equity buyers of online travel assets in Europe.”

LateRooms receives approximately one million unique visitors to the site each month.

Close Brothers Corporate Finance provided financial services to ECI and the other shareholders of LateRooms, while Eversheds gave legal advice.

In October ECI sold Kirker Travel, an independent provider of luxury holidays, to Kuoni, a premium travel organisation, for £15.5 million, according to a source close to the deal.  The sale generated an internal rate of return of 22 percent and made 2.1 times ECI’s investment, the source said.

ECI specialises in buyouts, buyins and development capital deals of £10 million to £150 million. The firm manages private equity funds of more than £500 million.