FF&P Private Equity reaps 2.2x return on OB10 sale

Ellie Pullen
16 October 2013

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FF&P Private Equity has sold OB10, a UK-based e-invoice network operator, to new holding company Tungsten Corporation, reaping a blended 2.2x its money.

OB10's shareholders, namely FF&P, Azini Capital, Cargill Ventures (now owned by Black River Asset Management) and company management, received £99m for the divestment. As part of the transaction, OB10's shareholders have divested 70% of their holdings in exchange for cash and converted the balance to shares in Tungsten.

FF&P's co-investors in OB10 will reap a return of up to 3.4x money from the sale.

The sale falls in conjunction with Tungsten's admission to the AIM market of the London Stock Exchange today (16 October) in a £160m IPO, giving Tungsten a market cap of £225m. The entity started trading under the ticker symbol "TUNG" at 8am BST.

Approximately 71.1 million shares were sold at a price of 225p per unit. Following Tungsten's flotation, OB10's shareholders will own an 11.5% stake in the newly listed entity, of which FF&P will hold 3.5%. Tungsten plans on using £73m of the amount raised in the IPO to finance the acquisition of OB10.

According to FF&P co-head Henry Sallitt, the firm has been in talks with Tungsten owner Edmund Truell for around 18 months. Tungsten was interested in acquiring the business due to its network of buyers and suppliers that has been built up under FF&P's ownership.

Canaccord Genuity acted as financial adviser, joint broker and sole bookrunner for the flotation of Tungsten, while Charles Stanley Securities was hired as joint broker and nominated adviser.

Tungsten was created last February by Edmund and Danny Truell for the express purpose of acquiring a company operating in the financial services sector. Following its flotation, the entity plans on acquiring a UK bank, namely the UK arm of the First International Bank of Israel, and has stated that it will use £58-60m of the capital raised in the flotation to finance the acquisition.

FF&P is the largest shareholder in OB10. The firm initially backed the company in 2005, in a $10.1m funding round alongside Cargill and Azini. This was followed by FF&P with a £5m investment in October 2006, as part of a £7.3m funding round with Lynx Capital Ventures. In October 2008, Azini acquired an 84.6% stake in Lynx and subsequently transferred its portfolio companies to be under Azini's management, including OB10, according to unquote" data.

Overall, FF&P has led approximately five funding rounds for OB10, the latest being a mezzanine round. The firm has injected £12m into OB10 in total.

During its time as an investor in OB10, FF&P has financed the international development and roll out of OB10's services, allowing the business to offer a constant, 24-hour-a-day service in all time zones. The company also underwent several management changes under FF&P's ownership.

Company
Founded in 2000, OB10 employs 225 staff and is headquartered in London, with additional offices in Germany, Malaysia and the US. The company operates a cloud-based e-invoice network that is designed to coordinate the invoicing and purchase order process between buyers and suppliers.

OB10 serves 122 corporate buyer groups, including Kraft Foods, Unilever, Hewlett Packard, IBM and BP, as well as more than 140,000 suppliers.

People
Edmund Truell, founder of Duke Street Capital, is the CEO of Tungsten. Luke McKeever is the CEO of OB10 and sits on Tungsten's board as an executive director. Henry Sallitt is the co-head of FF&P and sat on OB10's board of directors.

Advisers
Acquirer – Disruptive Capital Finance (Corporate finance).
Vendors – PwC (Corporate finance); Taylor Wessing (Legal).