DBAG sells Telio to Charterhouse

Telio's management is also selling its stake in the business as part of the deal, according to a statement. However, DBAG is to reinvest in Telio to hold a 13% stake in the business.

The proceeds from the sale are roughly in line with the valuation of the investment in DBAG's most recent interim financial statements, the GP said in the same statement.

The sale is expected to close within the next four months.

DBAG made an equity investment in Telio of €75.4m in April 2016, investing via its balance sheet as well as via DBAG Fund VI. The fund held a final close in August 2012 on €700m and was 86% deployed by December 2016, according to Unquote Data. Alcentra provided debt to back the deal. DBAG held an 83% stake in the business at the time of the exit.

During the investment period, the company made several add-ons, including France-based mobile phone detection and jamming technology business Konsortium Engineering Activities & Security (KEAS) in April 2019.

Unquote sister publication Mergermarket first reported in January 2019 that DBAG had hired GCA Altium to run a sale process for Telio. Sources said at the time that the company posted EBITDA of €20m and was expected to be marketed based on €25-30m.

After the sale process went quiet, Mergermarket reported in May 2021 that Telio was up for sale in a relaunched process and was to be marketed based on EBITDA of €30-35m. The report stated that Charterhouse was one of the final bidders in the process, with valuations expected at around 9x EBITDA.

Charterhouse is deploying equity via its 2016-vintage €2.3bn Charterhouse Capital Partners X fund. The vehicle generally invests in industrial and commercial businesses with valuations in the €300-4bn range, according to Unquote Data.

Company
Founded in 1998 and headquartered in Hamburg, Telio develops, installs and operates communication systems for prisons and correctional facilities. Its telephones allow users to make monitored calls from cells or communal areas. The company also produces computers, radios and TVs. Its systems operate in 700 facilities across 21 countries.

DBAG said in a statement that the company's revenues have tripled since 2015. Telio generated turnover of €51m in 2018, compared with €53m in 2019 and €83m in 2020.

People
Deutsche Beteilgungs AG – Tom Alzin (member of the board of management).
Charterhouse Capital Partners – Carsten Hagenbucher (partner).
Telio – Jürgen Städing (managing director); Oliver Drews (chairman).

Advisers
Equity (Charterhouse Capital Partners) – Alantra (M&A, debt advisory); Carlsquare (M&A); Allen & Overy (legal); EY (financial & commercial due diligence, tax); Intuitus (technology due diligence).
Vendor – GCA Altium (M&A); Alvarez & Marsal (financial due diligence); Goetzpartners (commercial due diligence); KPMG (tax); ERM (ESG due diligence); Milbank (legal).

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