MML sells Optionis to Sovereign-backed Arkarius

Kenny Wastell
11 January 2017

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MML Capital Partners has sold British professional services business Optionis to Sovereign Capital-owned Arkarius.

The deal was funded primarily by debt, a Sovereign Capital spokesperson confirmed, with Arkarius refinancing its existing facility into new packages worth a total of £135m, according to unquote" sister title Debtwire.

MML held a 53% stake in the business as of April 2016, according to publicly available records.

The deal represents a 2.6x return for the GP, which was invested in the company via its €250m fifth fund. MML partner Richard Mayers told unquote" the vehicle is now around 50% divested.

Following the deal, the consolidated group will trade under the Optionis brand, with the newly merged group having a client base of around 40,000.

Optionis founder and managing director Derek Kelly will take on the role of CEO at the group, while Arkarius CEO Simon Curry will oversee group operations, with an initial focus on the company's integration plan. Arkarius chairperson Jeremy Newman will continue to chair the new group.

Under MML's tenure, Optionis has undertaken an acquisitive growth strategy, most recently bolting on specialist pub accountant ARC Licensed Trade Consultancy. Other acquisitions include Wheatley Pearce and the accountancy business of Bridgewood Financial Solutions.

MML's Mayer said the group had evolved from an umbrella business, greatly increasing its focus on professional services for SMEs and micro-businesses. The company concentrated on a domestic growth strategy due to regulatory inconsistencies across various international markets.

The investment comes two years after Sovereign acquired accountancy businesses SJD Accountancy and Nixon Williams for £100m, and merged the two companies to create Akrarius.

At the time of publication, unquote" was unable to reach MML for comment.

Debt
Alcentra provided a unitranche debt package to support the deal, which Debtwire reports to be worth £120m. The publication also reports HSBC provided a super senior revolving capital facility of £15m. Sovereign's spokesperson declined to comment on the figures.

Previous funding
Inflexion Private Equity supported the £24m buyout of Optionis (known then as Parasol) in 2006. Eight years later, in January 2014, MML acquired the business from Inflexion in a secondary buyout deal, with the vendor reaping a 3.5x money multiple on the deal.

Company
Founded in 2000 and headquartered in Warrington, Cheshire, Optionis provides accountancy and HR services for freelancers and contractors. It trades under the Parasol and Clearsky brands and, at the time of its most recent bolt-on acquisition, the company had a headcount of 350. Optionis has additional offices in London and Poole.

According to publicly available records, Optionis generated a turnover of £300m in the year ending April 2016, with operating profits before amortisation of goodwill standing at £6.7m. Debtwire reports the consolidated business will generate EBITDA of £25m.

People
Sovereign Capital – Jeremy Morgan (partner).
MML Capital Partners – Richard Mayers (partner).
Optionis – Derek Kelly (CEO).
Arkarius – Jeremy Newman (chairperson); Simon Curry (CEO).

Advisers
Equity – PwC (debt advisory, corporate finance, financial due diligence); Pinsent Masons (legal).
Vendor – Clearwater International, Phil Burns, John Clarke, Mark Lawrence (corporate finance).