Private Equity News & Analysis

Primary Capital buys Misys unit

The UK private equity firm has made its fourth acquisition of the year, backing a £20m management buyout of the UK-listed company’s UK asset management operations business.

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Primary Capital, the European mid-market private equity house, has supported a £20m management buyout of the UK asset management operations business of UK-listed Misys, the global software products developer.

Primary, which is led by UK buyout veteran Charles Gonszow, did not disclose how much equity it agreed to invest. Royal Bank of Scotland provided senior debt.

 

The business, which will be renamed Rhyme Systems, currently provides investment modelling and post trade clearing and settlement systems, such as Quasar and Fiscal, to financial services firms in the UK including Brewin Dolphin, M&G, Jupiter and Rathbone Brothers.

 

Rhyme Systems’ focus will be on the operations part of the asset management process, including areas such as clearing, settlement, order management and accounting. In the UK, it is a market worth annually in excess of £150m, Primary said in a statement.

 

The new company is majority owned by Primary Capital while the five-man management team, led by Chris Potts, formerly the Misys Asset Management Systems CEO, will take a minority stake. The new company will have offices in London, Birmingham and Nantwich. Around 150 staff will transfer from Misys to Rhyme Systems.

 

Primary was introduced to the deal by PricewaterhouseCoopers who was acting for Misys in relation to the sale of the business. “We were competing with a number of financial and trade buyers and gained exclusivity for the deal in July,” said Peter Jacobs, a director of Primary Capital who joins the Rhyme Systems board as non-executive director. “It is an attractive business with a profitable track record. We are pleased to be backing a highly experienced management team and believe that Rhyme Systems is well placed to capitalise on its leading market position.”

 

Rhyme Systems is the seventh investment in the second fund, Primary Capital II, which closed in March 2002 at £100m and the fourth investment this year following investments in Cenargo Logistics, The Works and Yo Sushi. The fund is just under half invested.

 

“Dealflow is pretty good at the moment,” Jacobs added, “the best it has been since I joined the company two years ago. We hope to continue our strategy of completing three or four deals per year in 2004.”