WestBridge acquires Smart Capital Technology in MBO

Edward Minton, senior investment manager at Westbridge told Unquote this transaction marks the eighth deal from WestBridge Fund II, which has so far divested one company, AJM Healthcare.

The fund held a final close in June 2019 on its GBP 140m hard-cap, according to Unquote Data.

Minton said the sponsor’s deal pipeline looks strong, with another investment aimed to be complete in Q2. He added that the core of WestBridge's strategy is primary buyouts of businesses operating in niche growth sectors.

SCT’s MBO was led by CEO, Andy Morgan. The deal marks a partial exit for the founding directors, who will retain a small shareholding in the business. Debt Facilities were provided by Shawbrook Bank.

Minton told Unquote: “Given the strong market opportunity, management’s plan is centered around organic growth but we are not ruling out M&A if strategically aligned opportunities turn up, especially if they allow us to expand into new geographies or expand our service/tech offering.”

He added further that growth is centered around investing in the sales function to unlock new customer relationships in the UK, Europe, and the rest of the world. “We have a value creation model we systematically deploy across our portfolio to accelerate growth. We are proactive in working with management and our stable of operating consultants.”

Minton said the business is small, which gives it flexibility and agility to adapt to customer needs whilst maintaining industry-leading service levels. The key attraction of the business is its offering of critical service to customers, underpinned by 90% recurring revenues, said Minton.

Corporate finance firm HMT, which were sell-side advisors in the deal, ran a competitive process aimed at private equity sponsors, according to Minton. Minton said that the retiring shareholders of SCT had brought in a CEO two years ago to run an MBO this year. The process was run across the standard two rounds and WestBridge gained exclusivity.

As for exit plans, Minton said whilst the GP has assessed exit prospects pre-deal, as it does on all its transactions, it is too early to say how it will exit SCT. He said that they will work with the best advisors at the time and have no exclusive financial advisors. “We work with advisors best placed and qualified to advise us.”

Company
SCT was established in 2002 and is headquartered near Reading, England. The company’s main function is IT services organisation. Its flagship Inventory-as-a-Service provides an advanced part replacement service. The company has over 600 stock locations globally, around 50 field service engineers, and employs 87 staff. Its core operations are in the UK but it operates across the world.

People
Smart Capital Technology - Andy Morgan (CEO).
WestBridge – Edward Minton, Rory Whitrow, Valerie Kendall, James Wakefield (investment team).

Advisers
Vendor – HMT, Wendy Hart, Ricky Collis (corporate finance); Browne Jacobson, Michael Stace (legal).
Equity – KPMG, Sami Fairris, Michael Mackintosh, Neil Brown, Peter Bate (corporate finance); Capital Law, Tom Kelleher, Gareth Williams-Davies (legal); Grant Thornton, John Panteli, Sam King, James Harper, Olly Bridge, Kevin Wilson (financial due diligence); CIL, Tom Fletcher, Anthony Crutchett (commercial due diligence).

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• Topics
• Buyouts
• UK / Ireland
• Technology
• Buy-in/Buyout
• WestBridge Fund Managers
• United Kingdom