NorthEdge scores 4.4x on Sumo exit

The Northern England-focused buyout firm has sold the video game developer to private investment firm Perwyn after less than two years.

NorthEdge Capital, a Northern England-focused buyout firm, has sold video game developer Sumo Digital to private investment firm Perwyn after less than a two-year hold, according to a statement from the firm.

The sale, the firm’s second since it was founded in 2009, will generate a 4.4x return and an internal rate of return of 127 percent for investors in NorthEdge Capital Fund I.

The firm acquired Sumo alongside its management team, led by chief executive Carl Cavers, from US-based Foundation9 in November 2014.

Sumo, a developer of video games and interactive entertainment products, works in partnership with publishers including Sony and Microsoft to produce AAA franchises including Little Big Planet 3, Forza Horizon 2, and Disney Infinity 3.0, which have sold millions of copies worldwide.

Sumo is currently working on Crackdown 3 with Microsoft, a title designed to redefine open world gaming, and was recently announced as Koch Media’s partner on Dead Island 2.

During NorthEdge’s ownership Sumo has increased headcount from 240 to 350 across its UK and Indian offices, and in March 2016 launched a new Nottingham studio. Revenues have increased by 60 percent to £23 million (€27 million; $31 million) and profits have more than doubled, underpinned by an expanding client base and investment into the in-house technology engine, the firm said.

The sale follows the successful listing of tissue manufacturer Accrol in June, which reportedly valued the business at £116 million.

In March NorthEdge closed its second fund on its £300 million hard-cap after just four months in market. The fund was fully allocated at launch and received “overwhelming support” from both existing and new institutional investors, as reported by Private Equity International.

NorthEdge made its first investment from Fund II in July, backing the management buyout of home furnishings manufacturer Belfield Furnishings. In August the firm acquired a majority stake in ITC Luxury Travel Group, an independent luxury tour operator which featured in the BBC documentary “The Millionaires Holiday Club”.

Based in Manchester and Leeds, NorthEdge focuses exclusively on companies based in the north of England seeking equity investments to support MBOs, development capital and equity release. The firm typically invests between £5 million and £35 million, focusing on established businesses, typically with a turnover greater than £10 million and profits of more than £1.5 million, the firm said.