Small Buyout Exit of the Year
Connection Capital (Tempcover)
The sale by Connection Capital of disruptive insurtech Tempcover (based in Fleet, Hampshire) toRVU, owner of Uswitch, Confused.com and Money.co.uk was completed in July 2022. The exit delivered a gross return to Connection Capital materially in excess of 5x money over 4.5 years.
Tempcover was established in 2006 and Connection Capital backed the Company’s MBO in December 2017 with a further follow-on investment made in May 2019. The 2017 MBO and growth investment enabled ownership of Tempcover to transfer from passive shareholders to the management team led by CEO and Founder, Alan Inskip, and Connection Capital and gave the Company the financial resources to fund development of its market leading technology and customer experience, and to enhance its team.
As well as taking a Board Director seat at the time of deal completion, Connection Capital made use of its proprietary private client network to source a new Executive Chairman, Peter Barrett, who has been instrumental in helping Alan and the management team to develop and expand the Company.
Kester Capital (VIXIO Regulatory Intelligence)
Vixio is the market leader in the provision of regulatory and compliance intelligence to the payments and gambling markets. It generates the majority of its revenue (>90%) from annual subscriptions. Kester completed its acquisition of Vixio in August 2019 having sourced the deal off-market through Kester’s network. Kester backed the incumbent CEO whom it had known for many years and implemented a clear operational and strategic value creation plan alongside the CEO, professionalising and scaling the business over the next 3 years. This plan entailed:
The recruitment of a high calibre management team to support the CEO across all the key functions of the business;
Significant investment in the technology platform to create a scalable information and data business and simultaneously improve margins and operational efficiency;
Significant investment in the product to accelerate sales to existing and new customers;
Building a leading sales and marketing operation to improve pipeline conversion and increase customer retention rates.
During Kester’s ownership, Vixio improved renewal rates to >100% and accelerated new customer wins resulting in organic revenue growth of >20% and doubling ARR to c.£10m. EBITDA margins grew from 19% to 24% as operating leverage efficiencies were realised.
Following a highly competitive exit process, Kester completed the sale of Vixio to Perwyn inDecember 2022, delivering a return on Kester’s investment of 4.8x and an IRR of over 60%.
Tenzing Private Equity (CitNOW Group)
In July 2022, Tenzing sold its investment in CitNOW Group to Livingbridge, generating a return of 9.6x invested capital and a 74% IRR.
With Tenzing as its investment partner, the CitNOW Group maintained its strong track record of growth while adding scale through acquisitions and driving operating leverage. Revenues more than doubled, revenue quality also improved, with recurring revenue now c.95%, EBITDA increased fivefold and significant operating leverage was delivered, as set out in our thesis.
Due to the high conviction we had about the additional value CitNOW could create, we materially reinvested from both Tenzing Fund II and Tenzing Belay alongside Livingbridge.