VCT Industry Report 2015-16

79 / 92

79
Mobeus has won the title of VCT Manager of the Year for each of the last four years at the British
Private Equity Awards, the industry’s pre-eminent honour. The firm has £240m funds under
management and invests in privately-owned UK smaller businesses (“SMEs”) across all sectors.
Apr 2015
Manufacturing
Five UK sites
188
Jablite Holdings is made up of two distinct expanded
polystyrene (“EPS”) brands operating under a common
management structure: Jablite is the UK’s dominant EPS
construction brand, while Styropack is a leading brand in EPS
packaging products.
RATIONALE FOR INVESTMENT:
Jablite Holdings has a strong senior management team,
which over the last four years has turned the business around
to significant levels of profitability £48 million annual revenues
Although a recovery in the construction market has helped
drive top-line growth in the business in recent years, more
than half of the growth in profitability seen during that time
has come from a number of fixed and variable cost-saving
initiatives successfully initiated and executed by management
VALUE ADDED BY VCT MANAGER:
Mobeus was able to unlock a particularly complex deal by
managing:
The operational carve out of Jablite from its European
parent;
A £15.5m sale and leaseback of the business’s five freehold
manufacturing sites; and
The carve out of two legacy defined-benefit pension
schemes.
Mobeus provided a combined debt and equity investment of
£5m to support management in acquiring the company. The
£5m investment comprised a £3.5m loan note with a £1.3m
loan note premium attached – this ensures that 97% of the
VCT investment is received ahead of any proceeds being
distributed to shareholders. The Business has performed very
strongly since acquisition. Profitability is expected to almost
double in 2015, whilst the investment has already returned
£3.5m of the £5m cost to the VCTs within four months of
completion.
2014 & 2015
Education
Telford
77
Entanet is a wholesale communications provider based
in Telford. It is an established, cash-generative business
supplying a range of voice and data services to IT resellers
which, in turn, supply small and mid-sized companies. For the
year-ended 31 December 2014, Entanet reported revenues of
£30m.
RATIONALE FOR INVESTMENT:
Strong management team headed by a very motivated and
capable MD and supplemented by a high calibre Chairman
with impressive sector and private equity expertise
Market for IT services is highly fragmented and
characterised by strong growth in the demand for data usage
and connectivity services, as well as increasing adoption of
super-fast broadband and high-speed leased lines (still at
relatively early stages of adoption by SMEs)
Attractively priced transaction offering a stable, high-
yielding return with potential for significant equity upside
No bank debt in the transaction and a deal structure
providing good downside protection, not least because the
vendor is rolling over a significant proportion of his value
VALUE ADDED BY VCT MANAGER: The Entanet investment
provides a strong running yield, paying a yield of 9.2% per
annum to Mobeus Advised VCTs. Mobeus did not use any
external bank debt in the transaction, and the investment
is characterised by strong downside protection because the
deal is structured so that the majority of the VCT’s investment
is in the form of prior ranking loan stock. Mobeus Advised
VCTs also have a significant equity stake to provide significant
upside on an exit. This sector is characterised by significant
M&A activity and attractive exit multiples.
GROWTH IN REVENUE AND EMPLOYMENT: Entanet
provides an important service in the value chain for the
provision of communication needs to SMEs. These companies
do not want to deal with the large telecommunications
companies which tend to focus on residential and enterprise
customers, and generally offer poor quality service to SMEs.
Since the 2014 buyout, Entanet has achieved its highest
organic growth rate since 2009, at 10%.
020 7024 7600