Three Hills Capital Partners backs Tomorrow London MBO

Amedeo Goria
18 January 2016

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Three Hills Capital Partners (THCP) has invested ТЃ15m in an MBO for Tomorrow London, a sales platform targeting the fashion industry.

The Three Hills Decalia fund will provide £15m in liquidity to the current management of Tomorrow London, to buy out the remaining 50% stake from Saturday Group, a London-based advertising and media services company. Enterprise value is estimated to sit in the £30-35m range.

According to THCP founder Mario Moretti, negotiations started directly at the beginning of the year with Tomorrow CEO Stefano Marinetto. THCP used a hybrid profile of alternative credit, including bonds and convertibles, resulting in reduced risk and a quicker procedure. THCP took control of 22% of the newco, which controls 97% of Tomorrow London.

Tomorrow London is a sales platform that owns three permanent showrooms in London, Paris and Milan and plans to expand internationally, opening a new office in New York and pursuing strategic acquisitions.

THCP stated that negotiations are already taking place for a new acquisition. Moretti explained that THCP's usual policy is to finance bolt-ons via the portfolio company's balance sheet, but the fund is ready to allocate more capital if deemed necessary.

Moretti will join the management board following the deal. He will be joined by an industry expert with a particular focus on the American market, whose name has not yet been disclosed.

Three Hills was set up by former Hutton Collins partners Mauro Moretti, Leks de Boer and Michele Prencipe in 2013. It aims to invest in the consumer sector, targeting small and mid-market deals valued between €15-50m. The company currently manages two funds: Three Hills Sicav, which reached a final close on €100m and is now in its divestment phase, and Three Hills Decalia.

The Three Hills Decalia fund has now reached €100m of the €150m targeted at launch

Company
Tomorrow London is an international sales platform headquartered in London. The company operates logistics and distribution service both on the internet and trough permanent showrooms.

Headcount currently stands at around 100 employees and is expected to grow to 140 people in the next few years. EBITDA stood at £3.5m as of January 2016 and is expected to reach £5m in 2017.

People
Tomorrow London – Stefano Marinetto (CEO).
Three Hills Capital Partners – Mauro Moretti (founder, managing partner).

Advisers
Equity – Dickson Minto (Legal); Deloitte (Tax, Financial due diligence).
Management – Bird & Bird (Legal).