Carlyle buys The Foundry from Advent Venture

The value of the secondary buyout has not been disclosed but is reported to be in the £75-100m range, with Carlyle investing from its Carlyle Europe Technology Partners II fund that closed on €530m in November 2008. Arma Partners led a structured sales process, which is said to have also raised interest from trade buyers.

Advent Venture Partners, which had backed the management buyout of The Foundry in mid-2009, has fully exited the business. The founders and management will continue to retain a significant minority stake in the company.

This is the third time The Foundry has changed hands in the last four years, with the founders originally selling the business in 2007 to Los Angeles-based special effects company Digital Domain. Two years later the company's management, headed up by chief executive Bill Collis, initiated the management buyout backed by Advent.

Carlyle will look to continue the company's international expansion and ongoing product diversification, as well as broaden the application scope of its visual effects technologies.

Debt
Silicon Valley Bank provided a senior debt facility to support the transaction, while Falcon Investment Advisors converted its existing ownership in the company into mezzanine notes.

Previous Funding
Advent Venture Partners together with Falcon Investment Advisors backed the buyout of visual effects software developer The Foundry from Florida-based Wyndcrest Holdings in June 2009. The value of the transaction was not disclosed but Advent acquired a majority stake in the business.

Under Advent and Falcon's stewardship, The Foundry evolved from a plug-in developer to a visual effects software provider. The company pursued new product partnerships, expanded globally and developed new sales channels. Consequently, headcount tripled from 35 to more than 100 and growth accelerated, with revenue increasing from £6.1m to £14.9m in 2010. The Foundry expanded its now 4,000-strong customer base to include The Moving Picture Company (MPC), Prime Focus, Dreamworks, Industrial Light and Magic (ILM), Framestore, Cinesite and Double Negative.

Company
Founded in 1996, London-based The Foundry produces visual effects and image-processing technologies that boost productivity in motion picture and video post production. The company's products have been used to make recent movies such as Avatar, Tron:Legacy, Alice in Wonderland and The King's Speech. In 2010 it generated a £14.9m turnover with more than 100 staff.

People
Michael Wand represented the Carlyle Group on this transaction while Mike Chalfen led the exit for Advent Venture Partners. Phil Cox worked on the debt package at Silicon Valley Bank.

Advisers
Acquirer – Travers Smith (Legal).
Company – Morrison & Foerster (Legal).
Management – Clark Holt (Legal).
Vendor – Arma Partners (Corporate finance).

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• Topics
• Technology
• UK / Ireland
• Buyouts
• Secondary buyout
• Carlyle Group
• Advent Venture Partners