Investec seals innovative James Villa Holidays deal

Trying times require trying new methods of financing. Investec Growth & Acquisition Finance (Investec GAF) has pumped £6m into UK tour operator James Villa Holidays in a buyout that allows the management to hold a majority stake, while simultaneously obtaining funding for future growth.

This is despite a backdrop of growing economic uncertainty that has seen much of the leveraged buyout market grind to a halt. "Obtaining senior debt has become more difficult, meaning asset-based lending, as well as other types of alternatives, are becoming more interesting," says Ed Cottrell at Investec GAF.

The deal was unusual in that Investec GAF, acting as sponsor, took on a preferred equity role, with Bank of Scotland providing senior debt. Unlike traditional equity, it means that Investec GAF can protect its investment: significant equity rolled over by management and private investors means they sit below Investec GAF's, which is first ranking.

James Villa Holidays was founded in 1984 as an independent villa tour operator. (Pages 33 & 37).

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