PPM Ventures backs gaming MBO

The private equity arm of Prudential has funded the £40m management buyout of RAL Holdings, a UK-based amusement arcade operator, from Aberdeen Asset Management.

PPM Ventures, the private equity unit of UK insurer Prudential, has backed a management buyout of RAL Holdings, the UK-based amusement arcade business, in a deal worth £40m.

 

The business, which trades as Quicksilver, was a unit of the Rank Group until 1996 when Murray Ventures, now part of Aberdeen Asset Management, backed current chief executive Nick Harding in a £26m buyout.

 

Since the Murray Ventures investment, RAL has expanded its estate by 40 per cent and is projecting EBITDA for the current year of £6.4m on turnover of £30m, according to a statement.

 

PPM said in a statement that it will “facilitate further significant expansion” of RAL to enable the company to take advantage of the prospective deregulation of the gaming industry following publication of the government-commissioned Budd Enquiry, which recommended further liberalisation of the UK gaming industry.

 

Quicksilver focuses exclusively on the adult gaming business, with outlets in town shopping centres predominantly targeted at women. The company is the largest operator of its kind in the UK and claims a 14 per cent market share. It employs 650 people.

 

Bank of Scotland provided debt and mezzanine funding to the transaction, with the debt element of the acquisition comprising around 60 per cent. RAL’s management is to retain a 15 per cent stake in the business.

 

“RAL has already established a significant gaming presence on the UK’s high streets,” said Matthew Turner, a director of PPM Ventures. “[The deal] provides RAL with a platform for further expansion to maximise the opportunities for both organic and acquisitive growth.”

 

PPM Ventures already has an established presence in the gaming industry in Europe, thanks to the firm’s involvement in Gala Clubs, which was sold to Candover and Cinven for £1.24bn. PPM held a 15 per cent stake in the business alongside majority owner CSFB Private Equity.

 

Last March, the firm exited its interest in French casino operator Moliflor Loisirs to an investor group led by Legal & General Ventures and including Royal Bank Private Equity, for a cash consideration in excess of E400m.

 

Last month, PPM’s portfolio company Astron, a provider of information logistics services, acquired three businesses from Hays in a deal valued at £19m. The three units acquired, operating in the business process outsourcing sector, comprised the group’s transaction processing, document technologies and marketing technologies businesses.