Matrix receives further proceeds from exits

05 May 2009

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Despite adverse economic conditions, small buyout specialist Matrix Private Equity Partners has received deferred consideration on two exits originally completed in 2006 and 2007 - bringing its total IRR on the investments to 40% and 26% respectively.

The first investment in Secure Mail Services Limited (SMS) was made in 2002, when MPEP supported the part BIMBO of the company with a £1.3m investment. The exit was completed in 2006, with additional proceeds received through 2007-2009. In total, the firm has made an IRR of 40% and a cash multiple of 3.8x the total cost of the investment. London-based SMS offers a courier service for high value and sensitive items such as credit cards and passports.

"The major step up for SMS was when it won the delivery contract for the UK passport office, which made the business significantly more valuable," said Eric Tung, partner at Matrix. According to Tung, operating profits before the firm's investment were £1.7m and the turnover was £14m. After the exit, profits increased to £4.8m and turnover to £46m.

The second investment, in which MPEP backed the £13m management buyout of Ruskin Homes in 2002, was exited in 2007, with additional proceeds received this year. MPEP achieved an IRR of 26% and a cash multiple of 2.7x. Caterham-based Ruskin Homes is a residential housing developer, specialising in brown field sites.

Tung attributes the return from Ruskin to the company's geographical expansion, as well as the timing of the exit. Over the course of the investment, the company extended its business to Essex, which it was able to do because of the buoyant economy at the time.