Inflexion nets 16.2x on IT business

The IPO comes just a month after Inflexion netted a 3.6x return on the listing of National Accident helpline.

UK-based buyout firm Inflexion Private Equity has listed FDM Group, a UK-headquartered IT services company on the London Stock Exchange, according to a statement.

The IPO values FDM Group at a market-cap of £308.5 million. Inflexion will sell all of its shares yielding the firm 16.2x.

FDM trains graduates in business and technical fields that companies subcontract from FDM. The company’s list of over 130 multinational blue-chip clients includes UBS, Virgin and British Airways.

Inflexion, invested in FDM in 2010, using capital from its Inflexion Private Equity III, a £165 million, 2006-vintage in a £28 million take private deal, Simon Turner, managing partner at Inflexion told Private Equity International.

“When we acquired the business it was a relatively small UK business.” Inflexion then expanded the business into Hong Kong, New York, in Canada, in China in Germany and Singapore. “With clients like HSBC and UBS, once they are using your services in London they are keen to have the same kind of support in New York and Hong Kong, so we have had great support from the clients. With that increase in scale, we grew the number of employees fourfold and profits fivefold,” he said.

While the investment turned out well for Inflexion, there were some challenges – especially during the financial crisis, Turner admitted. “The business is providing IT-services to major financial institutions, so we had to be longsighted [and] we had to look past the crisis to see the real core-value of the business.”

The firm had the option to divest FDM in a secondary sale, but opted for an IPO instead. “It’s a very visible business and over the years we have had quite a few inbound enquiries from private equity firms. But this year is actually a good year for public market investors. They have a real appetite for good quality, growing businesses and we thought now was a good moment to capitalise on the value,” Turner said.

With the sale of FDM, Inflexion Private Equity III has now exited six investments, seven investments remain in the vehicle, he added.

Last month, Inflexion netted a 3.6x on the listing of National Accident Helpline. In January, Inflexion sold Optionis Group, a UK employment services company, netting the firm a 3.5x return.

The firm is currently investing its latest buyout fund, a £375 million, 2010-vintage. In January, the firm acquired a majority stake in Succession Holdings Limited, a UK-based wealth management business.