Private Equity Deals & Transactions

Hg books 2.1x from Manx Telecom IPO

The firm’s Fund 6 has generated a 2.6x return and a 40% gross IRR from its five exits to date.

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HgCapital is to float Manx Telecom, a UK telecommunications operator based on the Isle of Man, on London’s Alternative Investment Market (AIM).

The listing, which is fully underwritten and will see Hg sell its entire stake, is expected to complete on 10 February 2014, according to a statement.

Manx Telecom’s shares will be sold at a price of 142 pence per share. This means
Hg will sell the company for approximately £160 million (€193 million, $261 million), netting the firm a 2.1x return and a gross internal rate of return of 26 percent.

Manx Telecom, which will continue to be led by its current management team, offers a range of fixed line, broadband, mobile and data services to consumers and businesses on the Isle of Man.

Hg acquired the business from Telefonica in 2010, alongside CPS Partners. It said the two firms have supported the company’s revenue growth by reworking its customer proposition, while also improving its cost controls. Its steady cashflows allowed Hg to do a dividend recap of the business in March 2013, which contributed to the overall return.

Hg had not responded to a request for comment at press time.

With the flotation of Manx Telecom, Hg has now sold five businesses from HgCapital 6, a £1.9 billion, 2009-vintage.

In November, Hg sold electronic marketplace provider Epyx to US-based fuel payment processing company Fleetcor, generating a 2.7x return multiple, while in June, the firm sold Amsterdam-based management and administration business ATC to Blackstone-backed Intertrust for €303 million. In March last year, it also sold Computer Software Holdings Limited (CSH) for £110 million. In August 2012, the firm sold Mercury Pharma, a UK-based speciality pharmaceutical company, to Cinven for £465 million.

In total, these exits have generated a 2.6x return multiple and a 40 percent gross IRR, according to Hg. Following this realisation, the fund will have returned approximately 45 percent of all invested capital back to its LPs.

Hg is currently investing its seventh fund, which closed at its £2 billion (€2.4 billion; $3.3 billion) hard-cap in April last year. It made its first investment from this vehicle in December, when it picked up HR services software provider P&I Personal Informatik from The Carlyle Group.