ECI and Livingbridge reap 3.4x on Reed & Mackay exit

Kenny Wastell
04 August 2016

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ECI Partners and Livingbridge have sold their stakes in corporate travel business Reed & Mackay to Inflexion Private Equity, generating a 3.4x return on investment.

Under the vendors' tenure the company has undertaken an international expansion strategy, most recently opening offices in the US and UAE, as well as Scotland.

The company has also invested in in its digital services by developing its online booking system and bespoke mobile app, as well as introducing the IQ Protect travel risk platform.

The transaction marks the sixth exit for ECI's ninth fund, which held its first and final close in December 2008 on £430m. The fund remains invested in nine companies, while its successor vehicle - a £500m 2014-vintage fund - is now 40% invested.

Inflexion has a long track record of investing in the travel sector. In 2014, it sold Griffin Global Group to travel management and events business ATPI in a deal reportedly valued at £120m. The sale - following a five-year holding period - represented a 2.8x return for the GP.

Inflexion also acquired online travel agent On the Beach from Livingbridge in a £73m deal in November 2013. On the Beach floated on the London Stock Exchange with a £240m market cap in September 2015, generating an IRR of 84%.

Previous funding
Livingbridge (at the time known as Isis Equity Partners) acquired a significant minority stake in Reed & Mackay in 2005 through its Baronsmead VCTs. They invested £4.87m as part of a £10m deal, which also included senior debt and working capital from Royal Bank of Scotland.

ECI then joined Livingbridge in a buyout that valued the travel business at around £50m. The exit yielded a multiple of 4.8x and an IRR of more than 35% for Livingbridge's VCTs and was supported with debt from Lloyds Bank Corporate Markets' Acquisition Finance team.

Company
London-headquartered Reed & Mackay was founded in 1962 and specialises in providing strategic business travel management services to professional services firms. Since the 2011 buyout, the business has expanded its headcount from 250 to 400. Reed & Mackay also said its EBITDA had doubled during the period, growing at a CAGR of 15%.

People
ECI - Chris Watt (partner).
Livingbridge - Shani Zindel (partner).
Inflexion - Simon Turner (managing partner).
Reed & Mackay - Fred Stratford (CEO).

Advisers
Equity - Eversheds (legal).
Vendor - Rothschild (corporate finance); Travers Smith, Edmund Reed, Lucie Cawood, William Young (legal).
Company - Rothschild (corporate finance); Travers Smith, Edmund Reed, Lucie Cawood, William Young (legal).
Management - Ropes and Gray (legal); Liberty Corporate Finance (corporate finance).