YFM Equity Partners and Maven Capital Partners back the MBO of Indigo Telecom

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YFM Equity Partners LLP

20 July 2016

£12m Investment will accelerate the growth of the business and support a buy and build strategy in the telecoms sector

YFM Equity Partners (YFM) and Maven Capital Partners (Maven), two of the UK’s most active private equity houses, have backed the MBO of Indigo Telecom Group Limited (Indigo), acquiring the business from parent TTG-Global Limited. YFM and Maven have invested in partnership to provide a £12 million funding package, including additional funds to support a buy and build strategy to scale and diversify the Indigo group. YFM’s funding represents the first investment from its new YFMEP 2016 Fund, which held a first close in June.

South Wales based Indigo designs, installs and maintains telecom networks across the UK and Europe, enabling customers such as Vodafone, Sky and BT to deliver fixed line, broadband, mobile and other data services to a wide variety of corporate, enterprise and consumer end users. Its key capabilities include Project Services, such as large-scale, turnkey network installation and commissioning projects, and Managed Services covering the management, repair and maintenance of telecom networks.

Indigo has 85 full time employees, and operates a well-developed partner eco-system of up to 500 engineers. This enables the business to provide comprehensive geographical coverage for customers, with minimal ‘time to site’ service levels.

The company operates across 20 countries and supports over 10,000 client sites with operations managed through a dedicated 24-7 Network Operations Centre, which allows engineers to fulfil stringent two to four hour service level agreements, and offers a geographic reach which provides a key competitive advantage in the market.

Sustained investment in network infrastructure and technology, supported by continued high reliability maintenance, is essential to support the exponential growth of IP traffic, which is forecast to increase nearly three-fold in Europe over the next five years.
The robust underlying market dynamics, with high growth in fibre to the home, mobile multi-media and the cloud driving the need for well invested telecoms network infrastructure, underpins Indigo’s core service offering, with the business recognised as one of the market leaders for reliability of service and dependability.

The senior team is led by CEO Stephen Thompson, previously Vice President of Sales at Technicolor and COO of Alcatel Lucent UK & Ireland. Under Stephen’s leadership, the business has delivered year on year increases in earnings performance, as well as an increased focus on operational efficiency and improved mix of long term Managed Service revenues.

Management has a growth strategy to create a global telecom services group that is resourced to achieve both organic growth, capitalising on a number of attractive market opportunities, and a focused buy and build strategy in a sector that has seen strong recent M&A activity. The senior team has already identified a number of strategic bolt-on acquisition targets in rapidly growing areas of the market, which each offer sales and cost synergies for an enlarged group.

Stephen Thompson, CEO at Indigo, added: “The telecoms infrastructure market is experiencing sustained growth and our business is ideally positioned to grasp the opportunity for expansion as increasing client demand continues to reflect the need for access to reliable, high capacity networks. With the backing of Maven and YFM, allied to our existing client support infrastructure, we look forward to capitalising on the opportunity to gain additional market share, and pursuing a strategic acquisition programme.”

Colin Granger, Investment Director at YFM, said: “This deal is the first we have invested in via our new fund YFMEP 2016. Indigo is a strong, established player in a growing market and so aligns closely with our investment focus at YFM.

The firm benefits from significant organic growth potential and we are very excited by the acquisition opportunities that currently exist. We have been impressed with how Stephen and the team have developed and grown the business historically and look forward to supporting their future plans alongside Maven.”

Andrew Ferguson, Investment Director at Maven, said: “Indigo has established a well-deserved reputation in the market for delivering an integrated, multi service offering to telecoms clients, with market leading service levels. We have been very impressed by the senior team, who have a wealth of experience in the UK and international markets. Indigo enjoys clear competitive differentiation across its target markets, due to a high quality service offering built on an unparalleled level of geographic coverage and a network of vendor agnostic engineers. The business is well placed to expand both organically and through acquisition, and we’re delighted to be backing this entrepreneurial team and their growth strategy.”

Williams & Glyn provided senior debt and working capital facilities to support the transaction.

Management were advised by Peter Barrand of Ignition Corporate Finance and Peter McLintock of Mills & Reeve LLP. Legal advice was provided by Osborne Clarke LLP, Financial due diligence was carried out by HMT LLP, Commercial due diligence by CIL, Management referencing by Korn Ferry, Insurance by JLT. Williams & Glyn were advised by Irwin Mitchell LLP.

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