Unquote

Deal in Focus: Epiris sells Audiotonix to Astorg

Sound engineers and mixing desks
Sale of the audio mixing console business will generate a return of 4.8x and IRR of 51% for the vendor
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Epiris Managers – formerly Electra Partners – has agreed to sell audio mixing console producer Audiotonix to Astorg.

The sale will generate a 4.8x return for the vendor, representing an IRR of 51%, according to a statement. It will result in proceeds of £203m, marking an uplift of 44% compared to the company's NAV of 133 pence per share at the time of its most recent valuation in September 2016.

Financial details of the latest transaction remain undisclosed, though Astorg typically invests in companies with enterprise values of €600m-1bn. Audiotonix's EBITDA is in the region of £30m, unquote" understands.

Epiris has implemented a buy-and-build growth strategy for Audiotonix during its tenure, bolting on Calrec in March 2014 and Digico five months later. It has also overseen a reorganisation of the company's supply chain and invested in product development and marketing activity. According to the vendor's statement, the company has quadrupled its turnover since 2013.

Under its new owners, the business will look to expand its international operations and invest in product development.

Astorg is currently investing from its sixth buyout fund, which closed on its €2.1bn extended hard-cap in June 2016, after nine months on the road.

The Audiotonix deal is expected to close in Q1 of 2017, subject to regulatory approval.

The deal marks the latest in a series of divestments by Epiris, as it approaches the end of its 12-month notice period as investment portfolio manager of listed LP Electra Private Equity. It comes shortly after the £90m EV sale of claims management specialist Davies Group to US mid-market private equity firm HGGC.

Previous funding
Epiris first invested in Audiotonix in June 2013, when it acquired Allen & Heath from Japanese and American audio equipment corporation D&M Holdings for £43m.

The GP then bought Calrec from D&M for £14m nine months later and merged it with Allen & Heath to form Audiotonix.

In August 2014, Epiris acquired Digico from Mobeus Equity Partners and Livingbridge (at the time known as Isis Equity Partners), in a deal valuing the company at more than £50m, before merging it with the new group.

Company
Founded in 2014 via the merger of Allen & Heath, itself established in 1969, and Calrec, Audiotonix designs and manufactures audio mixing consoles for live sound. Headquartered in Chessington, Surrey, it continues to trade under the Allen & Heath, Calrec and Digico brands. The company's products have been used in tours for musical artists including Adele and Beyoncé, as well as sporting events including the Le Mans 24 Hour race.

Audiotonix generated revenues of £82m in the year ending March 2016, according to publicly available documents, with gross profits of £45m. As of March 2016, the company's debt stood at less than 2x its EBITDA, the documents reveal. This included a £20m loan facility repayable in instalments and maturing in March 2020 and a £40m facility repayable in March 2021.

Audiotonix has a headcount of around 320. Allen & Heath, Calrec and Digico had headcounts of 147, 157 and 60 respectively when Epiris acquired them.

People
Epiris Managers – Charles Elkington (partner); Ian Wood (investment director).
Astorg – François de Mitry, Stéphane Epin (partners).
Audiotonix – James Gordon (CEO).

Advisers
Vendor – RW Baird (corporate finance); Taylor Wessing (legal).

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