Mobeus makes first LP-supported deal with Kinneir Dufort MBO

Kenny Wastell
15 September 2016

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Mobeus Equity Partners has backed the management buyout of UK product design company Kinneir Dufort.

The transaction marks the first buyout Mobeus has made from its institutional fund, after the UK government made changes to Venture Capital Trust (VCT) structures in order to comply with European state aid rules.

The transaction value is undisclosed, though a source close to the deal told unquote" it values Kinneir Dufort at between £5-9m.

It is also understood the Kinneir Dufort management team has retained a slight majority stake in the business, with Mobeus holding a significant minority stake.

Under its new ownership structure, the business will look to expand geographically by setting up satellite offices, with locations in the US already having been identified. Kinneir Dufort recently set up an office near Cambridge to support its relationship with local pharmaceutical clients.

As part of the deal, Mobeus partner Richard Babington will take a seat on the company's board.

The GP has also provided a debt package to support the deal.

Mobeus has a track record of investing in the specialist consultancy segment. In December 2015 it sold analytics, software and consulting business Tessella to Altran Group, generating a 2.9x return and an IRR of 42%.

The new VCT regulations mean fund managers can no longer take ownership stakes, are limited as to the value range of individual investments and can only back companies under a certain age. As a result, it has been widely rumoured that many firms affected are in the process of raising institutional funds, though this is the first official confirmation that Mobeus has been doing so.

According to publicly available information, Mobeus has currently raised in the region of £70m for its maiden institutional fund.

Company
Founded in 1977, Bristol-headquartered Kinneir Dufort is a product design consultancy. It provides a broad spectrum of services ranging from consumer product branding to the design of computer hardware components for use in the healthcare, defence and consumer sectors.

Kinneir Dufort's clients include Unilever, Coca-Cola, Mars, Shell and Honeywell. It is understood the business generates EBITDA of around £1.5m.

People
Mobeus – Richard Babington (partner); Freddie Bacon (investment manager).
Kinneir Dufort – Merle Hall (client services director); Craig Wightman (design director); Michael Norris (financial controller).

Advisers
Equity – DAC Beachcroft, John Williams, Michael Pearce, Karen Jensen, Hannah Gordon (legal); RSM, Rebecca Guerin, James Killing, Rob Carlton, Steve Jacob (financial due diligence); CIL Management Consultants, Jon Whiteman, David Skuse (commercial due diligence); Highwire Consulting, Annie Gray (management due diligence).
Management – Momentum Corporate Finance, Rob Crews, Ali Boorman, Ross Bradley, Matt Stafford (corporate finance); Osborne Clarke, David Ferris, Chris Yeo (legal).