HgCapital exits Travelsphere for £155m

The London-headquartered private equity firm said it has returned a total of £50.1m to investors following the sale of UK travel operator Travelsphere to Electra Partners Europe.

European mid-market investor HgCapital has sold UK tour operator Travelsphere to Electra Partners Europe for a total consideration of £155 million (€225 million; $285 million).
Following completion of the sale, HgCapital said in a release that it will have returned £50.1 million to investors. Ben Hewetson, director and head of leisure investments at HgCapital, said that the firm generated a 2.5x money multiple and an IRR of 26 percent from its investment in Travelsphere.
HgCapital was advised by UBS, Lovells and Deloitte on the transaction, while management was advised by PricewaterhouseCoopers.
HgCapital originally acquired a 40 percent stake in Travelsphere in November 2000 for £20.2 million when the private equity firm was known as Mercury Private Equity, and was the asset management arm of Merrill Lynch. The firm invested from its MUST 3 fund. Travelsphere’s original founders retained ownership of the remainder of the company.
During its period of ownership, HgCapital installed Harry Coe, former managing director of Airtours, as non-executive chairman, while the group’s revenues more than doubled from £82 million in 2000 to £169 million in 2005, according to HgCapital.
In November 2004, HgCapital supported Travelsphere’s acquisition of travel company Page & Moy from 3i for an undisclosed sum. The London-listed private equity firm had invested £1.6 million in Page & Moy’s management buyout from Barclays in 1993.

Hewetson said that Travelsphere had been a successful investment, despite market conditions during HgCapital’s period of ownership. “Within the travel space, you couldn’t have picked five more difficult years, with 9/11, the war in Iraq, tsunamis, SARS and avian flu,” said Hewetson. “Along with the Page & Moy acquisition, we tried to engender more creative marketing and product development, as well as pushing through the concept of investing heavily in accounting systems and proper reporting guidelines, which the company hadn’t done before.”
Established in 1977 by founders Mike Edwards, Richard Mackay and the late Bruce Wake, Travelsphere specialises in tours for the over-45s to over 70 countries worldwide, including China, the Far East, the US and Europe. The Leicestershire-based business operates under the Travelsphere, Page & Moy and Just You brands.
In March, London-, Amsterdam- and Frankfurt-based HgCapital closed HgCapital 5, its second vehicle after spinning out from Merrill Lynch, on £950 million. In April, the firm completed its first investment from the fund, and its largest transaction to date, with the £322 million acquisition of UK residential care business Paragon Healthcare Group.
However, that deal size may be trumped by HgCapital’s €552 million (£380 million; $697 million) offer for listed Norwegian accounting software business Visma in mid-April, which has so far received acceptances from 41.3 percent of shareholders.