Synova reaps 46% IRR on £74.3m Defaqto sale to SimplyBiz

The transaction brings to an end a four-year holding period for the GP and equates to an overall IRR of 46%. It comes 15 months after Defaqto refinanced its debt package with existing lender HSBC to enable it to repay shareholder debt and raise additional capital.

The deal values the business at 14x its 2018 EBITDA, which reached £5.3m in 2018, according to a statement issued by the trade buyer.

Under the vendor's tenure, the business invested in product development, with a particular focus on its data and analytics capabilities, and made a number of appointments to its senior team.

The sale is the fourth exit from the GP's £110m second fund, which remains invested in a further four businesses. The vehicle has averaged returns of 5x to date with a total enterprise value of £560m. It has returned 3x its total invested capital to investors, according to the vendor's statement.

Previous funding
FF&P initially acquired Defaqto through portfolio company Find Portal, which purchased Defaqto parent The Independent Research Group in 2006.

Foresight became a shareholder in the company in 2011 when the group took over the Acuity Growth VCT funds, one of which was a shareholder in Defaqto.

Synova then backed the management buyout of the business from previous backers FF&P Private Equity and Foresight Group for £24.25m.

Company
Founded in 1994 and headquartered in Haddenham, Defaqto provides information on financial services products. It operates a retail financial product and fund database, which collects data from across the market and enables comparisons. Dafaqto creates products and services based on its data analysis, including ratings, software solutions, publications and events.

The company is best known for its rating services, often used by large banks and insurance companies to market their products to consumers.

Defaqto generated a turnover of £12.8m in 2018, according to the acquirer's statement.

People
Synova Capital – Philip Shapiro (managing partner).
Defaqto – Zahid Bilgrami (CEO); Chris Samuel (non-executive chairperson).

Advisers
Vendor – Houlihan Lokey (corporate finance); Addleshaw Goddard (legal).
Management – ABG Corporate Finance, Eleanor Wilkinson (corporate finance).

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• Topics
• Exits
• UK / Ireland
• Financials
• United Kingdom
• Synova Capital
• Trade sale
• Addleshaw Goddard
• Houlihan Lokey