Epiris swings 6.5x on Treetops sale

The sale comes as the newly-named firm seeks to raise up to £1bn for its first independent fund.

Epiris, a UK private equity firm formerly known as Electra Partners, has agreed to sell the UK’s fourth largest nursery education operator to day care nursery provider Busy Bees.

The firm expects to close the sale of Treetops Nurseries in April and generate a return of 6.5x cost with an internal rate of return of 59 percent, according to a statement.

Listed investment trust Electra Private Equity, Epiris’ major client, expects to receive proceeds of £93 million ($116 million; €108 million), an uplift of £44 million or 91 percent and equivalent to an increase in its net asset value of 107 pence per share on the valuation of the investment at 30 September.

Treetops Nurseries spun out of PINE Unit Trust in 2012. Epiris backed the management team to expand the business both organically and through acquisitions of smaller competitors, including a UK-based nursery school operator and Kindercare.

“In 2012 we designed a strategy to transform Treetops. Five years later we have delivered,” Epiris partner Chris Hanna said in the statement.

Treetops’s position as one of the UK’s largest nursery school operators is the result of a programme of growth investment, operational improvement and M&A, Hanna said, adding that the business has more than quadrupled earnings.

PwC Corporate Finance and Eversheds Sutherland advised Epiris on the transaction.

The sale comes as Epiris works on its first fundraising as an independent manager. The firm is seeking to raise between £800 million and £1 billion, as reported by Private Equity International.

The London-headquartered firm managed the portfolio of Electra Private Equity for 30 years, and this relationship ended after the listed fund – now under the control of activist investor Edward Bramson – served notice on its long-standing fund manager in May.

Epiris will manage the assets of Electra Private Equity until the end of May 2017, at which point management will shift to a team assembled in-house as the entity morphs from a listed investment trust to a corporate structure.