XLN Telecom Ltd (United Kingdom) - Jan 2008

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01 January 2008

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Zeus Private Equity has backed the management buyout of XLN Telecom Ltd, a telecommunications solutions provider. Zeus invested £6.63m to acquire a majority stake in the business which had a total enterprise value in the region of £15-25m. Kaupthing Singer & Friedlander provided senior debt and working capital facilities to support the deal. The deal represented an exit for two private vendors and US venture-backers Drake. KPMG was appointed to run a sales process. A high-net investor in Zeus’s fund helped to ensure the private equity house had thorough sector knowledge which Zeus believes helped it to win the deal. The deal took approximately three months to complete from exclusivity. Zeus was attracted to the deal as it believes deregulation in the market presents an opportunity for swift organic growth, as well as opportunities for consolidation in the fixed line and broadband services sector. Zeus and XLN already have an acquisition in the pipeline.

Company

Based in Vauxhall, London and employing 90 people, XLN supplies fixed line and broadband services to 70,000 customers in the SME sector. Formed in 2002 following deregulation of the UK telecoms sector, the company is one of Britain’s fastest-growing alternative telecoms service providers. XLN generates EBITDA of £3.7m on a turnover of approximately £30m.

People

Tony Dickin led the deal for Zeus and he joins the board alongside Zeus partner Gary Tipper. XLN was co-founded by former Ernst & Young Entrepreneur of the Year Christian Nellemann and Anthony Karibian. A non-executive chairman will be appointed in due course. Jamie Szpiro and Matthew Mole led the deal for Kaupthing Singer & Friedlander.

Advisers

Debt - Pannone & Partners, Andrew Gosnay, Phil Treanor (Legal)Equity - Deloitte, Ian Barton, James Oliver, Jodi Birkett, Richard Bell, Sam Baker (Financial Due Diligence)Equity - Halliwells, Alex Laver, Mark Dawson, Rebecca Grisewood (Legal)Equity - Marsh, Pamela Wadi (Insurance Due Diligence)Management - KPMG, Adrian Day (Corporate Finance)

Sourced from: UK & Ireland unquote" 362 (Feb 2008)