Arsys (Spain) - Dec 2007

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01 December 2007

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Mercapital and The Carlyle Group have teamed up to acquire a 79% stake in internet company Arsys in a deal valued at approximately €160m. The remaining 21% will be retained by the company’s founders. There are provisions for a small stake that will go to the management team; the percentage of this is still undecided. The debt package was provided in equal parts by two banks: Commerzbank and Barclays. The banks will keep most of the debt in their books and will only syndicate a small fraction of it. The deal was negotiated over a period of three months with a further three required for its formalisation. This is the first investment by Mercapital’s Spanish Buyout Fund III.

Company

Logroño-based Arsys was founded in 1996 by Luis Ignacio Cacho and Nicolás Iglesias. Arsys has become an important player in the Spanish domain registration and web hosting market, as well as one of the major European companies in the sector. With more than 550,000 domains registered and 170,000 clients, the company’s Spanish share of this market is reported at 11% which represents some 200,000 domains. The business has an established presence in Spain, France and Portugal and offers services in around 100 other countries. The investors plan to support the on-going organic growth given that this sector has reported a 15% annual increase in the Spanish market in the past years. This trend is expected to continue over the next few years. In 2007, Arsys recorded a turnover of approximately €40m with an EBITDA margin at more than 40%. The backers project 20% growth% this year. It employs a staff of 250.

People

David Estefanell Pañella led the deal for Mercapital. Fernando Chueca led the deal for Carlyle.

Advisers

Debt - Freshfields Bruckhaus Deringer, (Legal)Equity - Aon Gil & Carvajal, (Insurance Due Diligence)Equity - Arthur D Little, (Market/Industrial Due Diligence)Equity - Ernst & Young, (Financial Due Diligence)Equity - J&A Garrigues, (Legal)Equity - Optima, (Corporate Finance)Vendor - Atlas Capital, (Corporate Finance)Vendor - Lovells, (Legal)