SBOs: To Xafinity and beyond

Duke Street has completed its exit of Xafinity, the specialist pension services and employee benefits group, through a secondary buyout to Advent International in a deal of undisclosed value - the second SBO in two days.

Such deals are proof of the firepower of private equity, as well as of the return of debt to the market, albeit the single-bank underwritings of the boom years are far less prominent. Financing for the transaction was provided by a syndicate of lenders including Ares Management, Babson Capital, Bank of Ireland, Calyon, Lloyds TSB Corporate Markets acquisition finance and RBS.

The deal is the second secondary buyout in two days, coming hot on the heels of Bridgepoint ditching its plans for a Pets at Home IPO in favour of a sale to US giant KKR in a deal said to be worth close to £1bn.

The Pets at Home u-turn could be replicated by many companies that announced IPO plans but are now pursuing a dual track process, including Apax-backed clothing retailer New Look. But the lacklustre IPO scene could become a self-fulfilling prophecy: some argue that twin track processes risk alienating institutional investors in the future, as private equity firms use investor appetite for an IPO as a way to gauge and sweeten prices for a private sale.

Indeed, with the issues over debt seemingly now eased compared to the last six to twelve months, price has been highlighted anecdotally as the main barrier to sales. Increasing confidence in the economy (at least that things can’t get much worse) seems to have prompted both buyers and sellers to give ground in this regard, particularly in the case of private equity groups, which are under pressure both to buy and sell in equal measure.

Duke Street acquired Xafinity in 2005 and has supported the business in making acquisitions. In 2008, the company bought competitor Hazell Carr with fresh capital from Duke Street.

Xafinity provides pension administration, payroll and consulting services for around 1,100 public sector entities and companies, covering 2.1 million pensioners. The company employs 1,400 people in 14 locations across the UK and is headquartered in Reading.

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• Topics
• Buyouts
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• Secondary buyout
• Duke Street Capital