Isis Equity Partners has announced the sale of specialist secure messaging firm Boldon James to defence and security company QinetiQ Group for GBP20m.
Isis Equity Partners has announced the sale of specialist secure messaging firm Boldon James to defence and security company QinetiQ Group for GBP20m. The deal will be settled for an initial cash consideration of GBP7m, with a further GBP4.3m payable depending on the achievement of performance criteria.
The sale to QinetiQ yields a price/earnings multiple of 3.11X and an internal rate of return of 69.5 per cent to Isis and its investors, who backed the GBP5.5m management buy-out of Boldon James (through funds from the Baronsmead venture capital trusts) in June 2005. The original deal was led on behalf of Isis by Andy Gregory and James Hall, and Gregory, who took a place on the Boldon James board, led the exit.
Boldon James is a UK-based provider of software solutions for high-end secure messaging, primarily for military, government and security customers. Its applications are commonly used for communicating highly confidential strategic and tactical information across multiple sites and geographical locations. The firm employs 68 people and has offices in Crewe and Maidenhead in the UK.
Says Gregory: ‘When we invested in Boldon James, it was already a market leader in the delivery of secure email and messaging to the UK military and intelligence sectors. Under our ownership, we’ve strengthened the management team by introducing Richard Beaton as chairman. We have also worked with management to invest heavily in sales and marketing.
‘These changes have helped to extend the geographical spread of the company and attract business in overseas territories such as Italy and Hungary. Recent major contract wins include the UK Cabinet Office and Ministry of Defence. International clients include the US Department of Defence and the German Bundeswehr.’
Boldon James chief executive Martin Sugden says: ‘Isis understood the market in which we operate. It helped us to develop our business from being UK-focused to becoming a serious player in a global market.
‘The sale to QinetiQ, an international defence and security technology company, is the right move. It offers complementary expertise as well as a superb channel to market. We look forward to working with the QinetiQ management team to create platforms for future growth.’
The successful exit of Boldon James is an example of Isis’s investment experience in the IT sector. Other investments by Isis in niche software businesses include Blue 8, ScriptSwitch and MLS.
Christian Mayo of KPMG corporate finance in Manchester, which advised shareholders on the sale, says: ‘This deal clearly represents the next stage in the development of Boldon James, and we worked closely with management to ensure that the value and future potential of the business was recognised by the right strategic purchaser.
‘The company’s market leading products, combined with QinetiQ’s presence in the international defence and security markets, mean that Boldon James is ideally positioned to become a global leader in the provision of secure messaging solutions.’
Isis, which operates from offices in London, Birmingham, Leeds and Manchester, applies a research-led, sector-focused approach to investment in unquoted companies in the UK and across Europe. Core areas of interest are business services, financial services, consumer markets, healthcare, education, media and information technology.
Typically it invests in transactions where the transaction size is between GBP5m and GBP75m in value, with company profits in excess of GBP1m. Isis, which invests funds on behalf of both retail investors (Baronsmead VCTs), and institutional clients (Isis Equity Partners), had GBP704m in assets under management at the end of June.
