The founders of a business telecoms and IT services provider are on the brink of toasting a nine-figure windfall after entering advanced talks to sell it to one of Britain’s leading private equity firms.
Sky News has learnt that Focus Group is close to signing a deal to sell a majority stake to Hg Capital, the investor known for its successful bets on software and technology companies.
City sources said on Wednesday that the transaction would value Focus Group at just under £800m including debt, making it the latest addition to the ranks of Britain’s private company unicorns – a reference to its new $1bn valuation.
The deal will see founders Chris Goodman and Ralph Gilbert’s combined equity stake of more than 50% valued at well over £100m, although they are both expected to reinvest part of their proceeds in the business.
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The company has more than 30,000 customers spanning a range of industries.
In 2020, the two founders sold a 25% stake to Bowmark Capital, another private equity firm, at a valuation of about £225m.
It was unclear on Wednesday whether Bowmark would roll over its stake as part of the deal.
Insiders said a number of other private equity firms, including Bain Capital, had also explored offers for Focus Group.
Bankers at Houlihan Lokey are advising Focus Group on the deal.
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What the Chelsea Flower Show can teach you about investing
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Blackstone and Goldman Sachs to provide most of $900m Depot Connect direct loan
Blackstone and Goldman Sachs Asset Management are providing the largest portions of a $900m direct loan to Depot Connect International, which KKR & Co’s portfolio company will use to refinance more expensive private debt, according to a report by Bloomberg.
The report cites unnamed people with knowledge of the matter in revealing that Apollo Global Management is also participating in the deal, which will pay 4.75 percentage points over the Secured Overnight Financing Rate, or around 1.75 percentage points below the company’s existing debt.
According to one of Bloomberg’s sources, the loan to DCI, which provides solutions for tank containers including cleaning, repairs, maintenance, transport and storage, comes with one of the smallest issue discounts in private credit at 99.75 cents on the dollar, and is being arranged by KKR’s capital markets team.
Equistone makes partial exit from KWC
Equistone has made a partial exit from portfolio company KWC Group, a designer and manufacturer of fittings and accessories for kitchens and bathrooms, having sold the firm’s home division, KWC Home, to Italian sanitary specialist Paini.
Details of the transaction are undisclosed.
KWC Group was acquired by Equistone in 2021 and will continue serving a customer base of airports, shopping centres, schools, hotels, sports and leisure facilities, hospitals and retirement homes, through its remaining KWC Professional and OEM divisions.
Nickel price surges as New Caledonia riots raise concerns over supply
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Gridiron loses three dealmakers
Private equity firm Gridiron Capital has informed investors of the impending departure of Senior Managing Director Will Hausberg and Managing Directors Brad Skaf and Doug Rosenstein, according to a report by Bloomberg.
The report cites unnamed people with knowledge of the matter in confirming that the trio are set to explore other opportunities, including potentially starting a new firm.
According to Gridiron’s website, Hausberg, who was named Senior Managing Director in 2022, joined the firm in 2011 and is on the board of AML RightSource, Class Valuation, Colibri Group, Royal Paper and Travel Nurse Across America.
Skaf is on the boards of AML RightSource, the Service Companies and Cubii, having worked at the firm since 2016, according to his LinkedIn profile. He and Rosenstein were promoted to MDs in November.
Rosenstein joined in 2015 and is on the boards of Class Valuation, Colibri Group, Esquire Deposition Solutions, Travel Nurse Across America and Vistage Worldwide.
UK Inflation: What to Expect from April’s Data
Updated UK inflation figures are due on Wednesday May 22 and the forecast is for an annual rise of 2.7% for the Consumer Price Index (CPI), according to FactSet estimates.
Core inflation, which excludes volatile food and energy prices, is forecast to fall to 3.7%, from 4.2% in March.
CPI hit 11.1% in October 2022 and has fallen back sharply since. While energy prices have eased, there are still concerns over the price of food.
In a recent report, think tank Resolution Foundation says that 10 years of inflation was effectively squeezed into three years, forcing consumers to curtail spending.
James Smith, research director at the Resolution Foundation, said: “Next week headline inflation should finally return to normal levels, marking the end of the UK’s biggest inflation surge in more than four decades.
“The sheer scale of this near three-year inflation shock has reshaped the economy and public finances, and changed what people do with their money.
“The crisis has made us poorer, with the sharp rise in the cost of essentials hitting lower-income families hardest. It has also turned us from a nation of spenders to a nation of savers.”
While CPI fell to 3.2% in March, it is expected to fall in the coming months towards the 2% target, and even undershoot that, a prospect that seemed unlikely at the start of the year. But CPI is then expected to rise again as 2024 progresses, posing a dilemma for the Bank of England. Still, policymakers are keen to stress that one interest rate cut means that monetary policy is still restrictive – remember that the UK’s key interest rate has gone from 0.1% in December 2021 to 5.25% in August 2023.
When Will UK Interest Rates Fall?
Money markets assign a roughly 60% probability to the Bank of England cutting interest rates in June. But the Bank is keen to stress that the decision is still “data dependent”, with this week’s inflation numbers key. UK employment and wage data for March was stronger than expected.
The most recent Bank of England meeting on May 9 was, as expected, a “no change” meeting, with interest rates held at 5.25%. That said, there were obvious changes since the March meeting – one more member of the 9-strong monetary policy committee had voted for a cut. While the ratio of “no change” to “cut” votes is 7-2, more members are likely to join the cohort in
Blackstone to acquire majority stake in Priority Software
Blackstone Growth and affiliated funds will acquire a majority stake in business software provider Priority Software from private equity firms TA Associates and Fortissimo Capital, who are both retiring a minority interest in the business.
According to a press statement, Blackstone’s investment will help build on the company’s position at the forefront of the ERP software market and support its further growth across industries and markets.
Priority Software offers business applications and ERP solutions across retail management, hospitality and education through cloud-based applications. The company employs around 500 people across five offices in Israel, the US and Belgium.
Evercore acted as financial advisor and Goodwin and Gornitzky provided legal counsel to Priority, Fortissimo and TA. Kirkland & Ellis and Meitar provided legal counsel to Blackstone. Terms of the transaction have not been disclosed.
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