Connection Capital reaps 8x on Advanced Electronics exit

Amy King
16 May 2014

Tweet
Facebook
LinkedIn
Google plus
Send to

Connection Capital has sold its minority stake in fire systems manufacturer Advanced Electronics to FTSE 250 company Halma for ТЃ14.1m.

The initial cash consideration totals £14.1m, with potential deferred consideration of up to £10.1m, based upon earnings growth to March 2015.

The sale is expected to generate an initial return of 8x, post-enterprise investment scheme (EIS), or 6.5x pre-EIS.

The existing management team will remain in place and continue to manage the business post acquisition.

Halma is a FTSE 250 company that provides products for hazard detection, life protection, personal and public health improvement and environmental protection. The acquisition extends the firm's products in the increasingly regulated fire safety systems sector. Advanced Electronics will operate as a stand-alone business within Halma's infrastucture safety division.

Halma's existing cash and debt facilities were used to fund the acquisition.

Previous funding
In 2003, Connection acquired a stake in Advanced Electronics via an equity injection structured as EIS eligible alongside a debt restructuring. The deal was brokered by RMT in Newcastle, according to unquote" data.

The funding was designed to support marketing and product development, as well as investment in new, automated manufacturing equipment at its premises in Newcastle and Barnsley, according to unquote" data.

Company
Founded in 1999 and based in Cramlington, Advanced Electronics is a fire systems manufacturer that produces detection and control systems. The company now has a team of 125 across offices in the US, Dubai, India and the UK. Projects so far include The Shard, Waterloo, St Pancras station, Edinburgh Waverley station, Millennium Stadium and the Westfield shopping centre.

Since the original investment, turnover has grown from £1.2m in 2003 to £14.6m in 2014.

People
Bernard Dale, partner at Connection, worked on the deal. He also led the 2003 transaction.

Advisers
Vendor – EMW (Legal).
Company – PwC, Paul Mankin (Corporate finance); Watson Burton, Duncan Reid (Legal); KPMG, Dean Harries (Tax).