Oakley’s maiden exit books 3x return

Montagu’s pending £222m purchase of web-hosting company Host Europe will put the firm’s third fund at the 75% deployed mark.

AIM-listed turnaround investor Oakley Capital has completed its first exit, selling Host Europe Group (HEG) for £222 million (€266 million; $345 million) to London-based Montagu Private Equity.

Oakley confirmed the sale represented a return of three times its initial investment.

The deal was also the result of an auction process, said a source with knowledge of the situation, who also revealed that Montagu was chosen by management – who are reinvesting for an 18 percent stake in the business – for its German experience, and for a perceived “good fit”.

Oakley acquired HEG, a web-hosting and domain services provider to SMEs in Germany and the UK in 2008 for £120 million. The group consists of two businesses, Webfusion and Host Europe, the former UK-focused, the latter Germany-focused.

Montagu will now merge the two companies, looking to create value by streamlining the overall business.

The investment is part of Montagu’s third fund, which closed on €2.26 billion in 2003 and is currently around 75 percent deployed. Earlier this year, the firm reached an agreement with LPs to extend the investment period on the fund by another year until July 2011 fearing unfavourable market dynamics might cause it to overpay for assets.

Montagu declined comment.

Shares for Oakley’s AIM-listed vehicle Oakley Capital Investments rose eight percent to 122 pence a share today.