Hg, the Manager of HgCapital Trust plc ("the Company"), today announces the sale of JLA to Cinven. The terms of the transaction were not disclosed.
The sale of JLA delivers a c. 4.9x investment multiple and a c. 26% gross IRR over the investment period.
The Company, whose shares are listed on the London Stock Exchange, gives private and institutional investors the opportunity to participate in all Hg's investments.
This transaction values the Company's investment in JLA at approximately £34.2 million. This would represent an uplift of £7.7 million (29%) over the carrying value of £26.5 million in the Net Asset Value ("NAV") of the Company at 30 April 2018.
Based on the 30 April 2018 reported NAV (including all transactions announced to date and the resulting revaluation of the carried interest provision), the pro-forma NAV of the Trust is expected to be £719.0 million (or 1,926.2 pence per share). The Company will realise estimated cash proceeds of approximately £4.8 million on completion of this transaction, after allowance for a payment of carried interest to the Manager. The Company's liquid resources available for future deployment (including all announced transactions) are estimated to be £150 million (21% of the pro-forma 30 April 2018 NAV). In addition, the Company has access to a £80 million standby facility, which is currently undrawn.
Hg agrees sale of JLA to Cinven
- Sale of JLA delivers 4.9x return to the Hg6 Fund (2009 vintage).
- JLA more than doubled in size during Hg investment, successfully developing new product categories and significantly growing total employment.
- 17th exit from Hg6 to-date and the 5th exit from Hg in 2018.
14 May 2018 - Hg today announces the sale of JLA, a UK sector leader for critical assets solutions in the commercial laundry, catering, heating and fire safety markets, to Cinven.
The closing of the transaction is subject to regulatory approval and the terms are not disclosed.
JLA provides equipment, supply and services solutions across commercial laundry, catering, heating and fire safety to customers across the UK, primarily through its 'Total Care' offering. Total Care provides customers with a hassle-free solution for running critical areas of their business, minimising downtime and maximising peace of mind for business owners.
Hg's Services team invested in JLA at the beginning of 2010, identifying JLA as a 'hidden champion' services business. JLA displays best-in-class services characteristics: stable and predictable revenue streams, growth from both existing and new customers, and a wide customer base with high customer satisfaction levels.
Since 2010, in addition to the organic development of new product offerings in the Catering, Heating and Fire Safety markets, JLA has successfully completed 16 bolt-on M&A transactions. During this time the business has more than doubled in size, with employment increasing from 310 to 900 across the UK.
Thorsten Toepfer and Joris Van Gool, Hg, said: "JLA has been a strong performing business, displayed by its 25 year-on-year unbroken growth track record. Hg has supported management to enable this growth during our 8-year investment period, including a variety of operational projects covering new product development, digital marketing and acquisitions. Hg's investment returns have been driven by the combination of impressive revenue and EBITDA growth, as well as accretive M&A delivered by a world-class management team. We have really enjoyed working with the JLA team and we wish them well as they continue their success."
Stephen Baxter, CEO of JLA, said: "JLA has enjoyed an incredibly successful period during our partnership with Hg. The operational projects we have undertaken together have proved valuable, whilst the M&A activity has helped expand and diversify our services. We look forward to working with Cinven, who we're confident will help us maintain this momentum and continue JLA's future growth."
The sale of JLA will deliver an overall return to Hg6 clients of 4.9x original cost, generating a gross IRR of 26%. The realisation of JLA represents the 17th exit from Hg6 to-date and the 5th exit from Hg in 2018.
Advising on the transaction were Baird (Corporate Finance), Deloitte (FDD), Skadden (Legal), EY-Parthenon (CDD).
For further details:
Hg
Laura Dixon +44 (0)20 7089 7888
Maitland
Vikki Kosmalska and Seda Ambartsumian +44 (0)20 7379 5151
About HgCapital Trust plc
HgCapital Trust plc is an investment trust whose shares are listed on the London Stock Exchange (ticker: HGT.L). The Company is a client of Hg, giving investors exposure to a portfolio of high-growth private companies, through a liquid vehicle. New investments and existing portfolio companies are managed by Hg, an experienced and well-resourced private equity firm with a long-term track record of delivering superior risk-adjusted returns for its investors. For further details, please see www.hgcapitaltrust.com .
Neither the contents of Hg's, HgCapital Trust's, Cinven's, JLA's websites nor the contents of any website accessible from hyperlinks on the websites (or any other website) is incorporated into, or forms part of, this announcement.
