Inflexion enjoys fourfold return

UK mid-market firm Inflexion has more than quadrupled its money following the secondary buyout of IT resourcing company Red Commerce by peer Dunedin.

Inflexion Private Equity has exited Red Commerce, which supplies IT consultants to corporations, with a sale to Dunedin Capital Partners for £44 million. The exit represented a 4.4x return on equity for Inflexion, with an internal rate of return of 34 percent, according to a statement.

The disposal was the seventh from Inflexion’s 2003 fund, and follows the firm’s successful fundraising in September last year, when it closed its fourth fund on £375 million after just four months on the road.

The firm acquired Red Commerce in late 2005 in a £15 million buyout. Inflexion introduced a new chairman, and helped foster growth at the company according to managing partner Simon Turner, who said: “The company has done everything we’ve asked of it; it’s been a classic Inflexion deal. We acquired it from an entrepreneur, brought in an excellent new chairman, expertise and some additional strategic clarity.

“Various people had been tracking the business, and now seemed like a natural time to exit our investments. The next step for the company will be to press on with international expansion, particularly in the US,” Turner added. 

Red Commerce’s last reported earnings before interest, tax, depreciation and amortisation were £5.5 million, according to Dunedin.

Dunedin also drew attention to the Red Commerce management team's sporting prowess. Examples include chief operating officer Stephen Lawrence, who has won a gold medal for Britain in fencing at the Commonwealth Games,  and Germany-based director Andy Duke, an England Under-21 Rugby international.