Hg reaps 4.9x on sale of JLA to Cinven

Kenny Wastell
14 May 2018

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Hg has generated a 4.9x return on the sale of UK commercial asset maintenance business JLA to Cinven.

Financial details of the transaction remain undisclosed, though Unquote understands the transaction valued the company at more than £600m. It is also understood the business was being marketed based on an EBITDA figure of approximately £47m.

The deal brings to an end an eight-year holding period for Hg, representing a gross IRR of 26%. The transaction also comes two and a half years after JLA refinanced, with the GP selling a minority stake to a group of institutional investors including Ardian and LGT Capital, lowering its equity stake to 62%.

An industry source told Unquote that the transaction was concluded just two days after the first round of bidding took place. It is understood the bidding was dominated by traditional PE firms and infrastructure investors, with a handful of trade investors expressing an early interest.

Bidders were attracted to the company due to its recurring revenue model based on seven-year contracts, Unquote understands.

During Hg's holding period, JLA has made 16 bolt-on acquisitions and expanded it service range beyond its core focus on laundry equipment to include services related to catering, heating and fire safety.

The transaction is the ninth investment made by Cinven's sixth fund, which closed on its €7bn hard-cap in June 2016 after just four months on the road. The vehicle typically provides equity cheques of €150-600m, and Unquote understands it is now more than 50% deployed.

Under its new owners, the company will continue to explore expansion into new services, in addition to undertaking international expansion and considering bolt-on acquisitions. According to a statement issued by Cinven, JLA has enjoyed double-digit EBITDA growth since 2013.

The vendor was invested in the business via its sixth fund, which closed in December 2009 on £1.87bn. The deal is the 17th exit for Hg6, according to a statement.

Previous funding
Hg (then HgCapital) acquired a stake in JLA in March 2010 through a management buyout.

Company
Headquartered in Ripponden and founded in 1973, JLA designs, installs, maintains and repairs commercial laundry, catering and heating equipment. It has a headcount of 900, up from 310 at the time of Hg's initial investment.

People
Hg – Thorsten Toepfer (partner); Joris Van Gool (principal).
Cinven – Rory Neeson (partner); Daniel Tanase (principal).
JLA – Stephen Baxter (CEO).

Advisers
Vendor – Baird, David Silver, John Sun (corporate finance); Deloitte (financial due diligence); Skadden Arps Slate Meagher & Flom (legal); EY-Parthenon (commercial due diligence).