BGF (Business Growth Fund) is participating in a GBP55m fundraising round alongside new senior debt facilities of GBP20 million to support the acquisition of Tax Computer Systems by AIM-listed Eco City Vehicle (AIM: ECV) for an enterprise value of GBP73 million.
BGF is providing a GBP10 million structured investment to support the long-term growth of the combined group, alongside funding from a consortium of institutional investors led by technology merchant bank MXC Capital, who originated the deal, and additional debt facilities.
TCS is the supplier of corporate tax software, Alphatax, and provides associated support and professional services to large corporates and accounting professionals in the UK and Ireland. Founded in 1985 by chief executive Robert Davies, TCS generates close to GBP13 million in revenue, the majority of which comes from recurring software licenses.
The business plans to operate under a new name – Tax Systems plc – and build a UK tax automation and compliance software business of scale through organic and potentially acquisitive growth. The management team will draw on TCS’s expertise in the sector and extensive customer base.
TCS is based in Staines-upon-Thames and employs 62 staff. Gavin Lyons, partner at MXC Capital, will take on the role of executive chairman of the combined group.
So far this year, BGF – which has up to GBP2.5 billion long-term capital to invest in Britain’s small and mid-sized businesses – has provided funding to 13 AIM listed businesses in either structured investments or straight equity cheques.
Previous structured investments include Castleton Technology and adept4, formally Pinnacle Technology. BGF launched its distinct offering, known as BGF Quoted, to listed companies in September 2014 when it invested in Victoria Carpets.
Stephen Welton, chief executive of BGF, says: “We are delighted to be supporting the team at Tax Systems Plc as they embark on growing the business and investing in its people, platform and services.
“This is the first investment we have announced following the referendum vote, and a clear demonstration of our pledge to support UK businesses. Now is not the time to put the brakes on. Now is the time to continue backing entrepreneurs with our GBP2.5 billion of investable capital. That is something we are absolutely committed to doing.”
Marc Young, chief executive of MXC Capital, says: “We are delighted to be bringing TCS to the market in partnership with the BGF. TCS has an established market leading corporation tax software platform we believe we can expand and grow. While there will be uncertainty in financial markets in coming months we believe that good quality opportunities in the TMT space backed by sponsors with successful track records of delivering returns, throughout the economic cycle, will continue to be attractive to investors. We look forward to working with the BGF again in the future.”
BGF’s investment was led by Ben Kirby, Matthew Singh and Tom Jenkins.
