Inflexion sells Alcumus to Apax for 5.9x money

A source close to the situation told Unquote that the exit has also seen the GP net returns of more than 35% IRR at fund level.

Unquote sister publication Mergermarket reported in December 2021 that Inflexion had mandated Harris Williams to assist with the sale process for Alcumus, which was expected to come to market in 2022. However, one source suggested that sponsors could pre-empt the auction, given the strong private equity interest in the sector.

Earlier in February 2022, Mergermarket reported that potential buyers had been asked to submit indicative offers by 7 February. Parties considering submitting bids included Providence Equity, KKR and Hg-backed Citation Group, Apax and Cinven, sources told Mergermarket.

According to Mergermarket, the business was marketed based on EBITDA for the 2022 financial year of GBP 34m, although sources told the publication that the current EBITDA figure was closer to GBP 30m, with research and development spend likely to reduce this to GBP 25m in future.

A valuation of 15-20x EBITDA was expected, sources told Mergermarket. Taking into account the EUR 30m-34m EBITDA range, Alcumus's GBP 600m valuation would correspond to a multiple of 17.6x-20x.

Inflexion acquired Alcumus in October 2015 in a GBP 92m SBO from Sovereign Capital, investing via its GBP 650m, 2014-vintage Inflexion Buyout Fund IV. The vehicle typically provided equity tickets of GBP 15m-75m, according to Unquote Data.

Previous exits from the fund include insurance broker Bollington Wilson, which the GP exited in January 2021 via a GBP 250m trade sale, netting returns of 5x money and 50% IRR. The GP sold fellow Fund IV portfolio company Kynetec in March 2021 to sustainable food chain investor Paine Schwartz Partners; the deal valued the UK-headquartered agricultural data and information platform at USD 225m and saw the GP make returns of 3x money and 25% IRR.

Under Inflexion's ownership, Alcumus made six add-ons in the UK and beyond, and the GP also supported the company with the development of its ESG policy. Its acquisitions included the GBP 47m bolt-on of Santia in 2015.

Apax Partners is currently deploying equity via Apax X, which held a final close in January 2021 on USD 11bn. The fund focused on the technology, telecommunications, services, healthcare and consumer sectors, with 35-50% of the fund expected to be allocated to Europe and North America.

Apax said in a statement that it has followed the environmental, health and safety (EHS) sector for some time and plans to leverage its experience in software, ESG and digitisation as part of the Alcumus' growth plans.

The deal is expected to close in Q1 2022.

Previous funding
Sovereign Capital acquired health, safety and environmental risk management services provider Sypol in August 2009, investing EUR 23m in the business, according to Unquote Data. The company acquired Info Exchange in October 2010, forming the Alcumus Group. Alcumus made several further add-ons prior to its sale to Inflexion in 2015.

Company
Founded in 2009 and headquartered in Cardiff, Alcumus provides technology-led risk management and compliance services for around 45,000 global customers for a range of corporates and organisations. Its services cover areas including ESG, health and safety, and certification management.

Alcumus posted revenues of GBP 46.2m and EBITDA of GBP 19.4m in 2019, versus revenues of GBP 40.1m and EBITDA of GBP 17m in the previous year, according to the company's publicly available accounts.

People
Alcumus – Alyn Franklin (CEO).
Inflexion – Mark Williams (partner); Sergio Ferrarini (partner); Nick Rosenberg (investment director).
Apax Partners – Frank Ehmer, Anders Meyerhoff (partners).

Advisers
Equity – Allen & Overy (legal); Houlihan Lokey (corporate finance); Boston Consulting Group (commercial due diligence); Deloitte (financial due diligence, tax).
Vendor – Harris Williams (M&A); Eversheds Sutherland (legal); Boston Consulting Group (commercial due diligence); Deloitte (financial due diligence); PwC (tax); Crosslake (technology due diligence).

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• Topics
• Exits
• Buyouts
• Industrials
• UK / Ireland
• Inflexion Private Equity
• Secondary buyout
• Apax Partners
• United Kingdom