U.K. Private Equity Firms’ Investors Set for High Cash Returns


May 19, 2014

The improved economic outlook of the United Kingdom is set to see a large number of private equity firms in the country look to cash in on their holdings in various companies across several industries. The UK economy is widely regarded to be fast recovering, and while there are concerns in the country about the housing market this confidence is being carried throughout the financial sector.


Financial News has reported that the current economic performance and outlook in the country has created an opportunity for private equity houses and other stakeholders to sell to buyers that have high levels of confidence in the marketplace.


As the private equity industry has been under pressure in recent times due to the relative lack of attractive deal opportunities meaning record levels of dry powder are being sat on, this represents a great chance for firms to return large sums of cash to investors.


This step could be crucial for returning confidence to investors and for ensuring that future fundraising initiatives are able to realise their targets. The first firm cited by Financial News is AAC Capital Partners UK, who are reportedly looking to sell Strix Investments, a company that is valued at £350million. AAC lists Strix on their website as a “market leading developer and manufacturer of controls for small domestic appliances.”


The business is currently based in the Isle of Man and in the Chinese city of Guangzhou, although it is as yet unknown whether there are any interested parties. Any sale is not expected to be completed for a number of months, and at this stage is most likely to be finalised in quarter four.


Sovereign Capital are one of the firms that could benefit the most from returning cash in the coming months, as they are believed to be eyeing a fundraiser later in 2014. Sovereign are reportedly looking to recapitalise training firm Paragon.


This has increased speculation linked to a sale, although while there is currently no company debt it is unlikely that a sale would be happening imminently, with no interest reported from any party.


Sovereign has appointed Livingstone Partners to manage the recapitalisation. Sovereign is also looking to sell Tracscare, and it is the success or otherwise of this deal that could have a large bearing on whether they are able to raise the funds they are seeking later in the year. Inflexion is another UK firm that is planning a 2014 fundraiser, and the firm is currently looking for an exit route from two companies within its portfolio.


Phlexglobal is understood to be one of these companies, with a deal likely to bring in the region of £50million – £60million, with the other being I.T. firm SDM, although this may prove tricky given that Inflexion failed to sell the business as recently as 2012.


These prospective sales and returning of cash to investors, along with the planned fundraisers, could lead to a bumper second half of 2014 for the UK private equity marketplace.

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