Livingbridge exits Red Box in sale to US-based Uniphore

Wahida Ahmed
02 February 2023

Tweet
Facebook
LinkedIn
Google plus
Send to

Mid-market sponsor Livingbridge has sold Red Box, a UK-based AI voice recording software business, to California-based AI and automation provider Uniphore Technologies.

Adam Holloway, partner at Livingbridge, told Unquote that the exit brings Livingbridge V close to full realisation, with ferry travel aggregator Direct Ferries as one of the few businesses left in it. The 2012-vintage vehicle raised GBP 360m and conducted another 11 exits to date.

Nottingham-based Red Box was bought in a primary deal in 2013 and two years later the business was refinanced as it had debt capacity not being used, Holloway said.

During Livingbridge's ownership, the sponsor strengthened the company's management team and capabilities. It expanded its offering from compliance voice recordings serving mainly SMEs to focusing on enterprises and medium-sized businesses and providing voice data for AI.

During this period, Red Box doubled its turnover and it changed from selling perpetual licenses to a subscription-based model. It had a turnover of approximately GBP 9m in 2013.

Holloway explained why the sponsor did not pursue an M&A strategy for the company: "Given Red Box's specialist focus, keeping it solely as a voice capturing business, that integrated with multiple other technologies meant there was no need to build out their offering by acquiring other businesses, and this also ensured there was a streamlined exit route when the time came."

Holloway said the exit generates a good return and attractive IRR, declining to mention figures. It also achieves a significant multiple arbitrage for the sponsor compared to the entry. This was made possible by an investment to develop a later-gen product called Conversa, which enables the company to serve new markets such as enterprise and AI on top of compliance, he said.

The timing of the exit was driven by the long period, Holloway said. The sponsor launched a sale process in September, which drew interest mainly from trade buyers due to the synergies it can offer but also from PE firms, as a result of the improvement in the capabilities.
Uniphore Technologies has a suite of AI products and by buying Red Box it can enhance its offering, Holloway said.

Livingbridge is investing through funds including Livingbridge 7, which closed on GBP 1.25bn in April 2020, according to Unquote Data.

Company
Founded in 1988, Red Box is headquartered in Nottinghamshire and has approximately 170 employees. It provides voice capture and recording services from a multitude of sources including Microsoft and Zoom. It also provides compliance recordings and AI strategies.

People
Livingbridge – Adam Holloway (partner).
Red Box – Richard Stevenson (CEO).

Advisors
Vendor – Obair Partners (corporate finance); Pinsent Masons (legal).

[Editor's note: The article has been amended following a request by Livingbridge to clarify Direct Ferries is one of the few businesses left in Livingbridge V's portfolio.]