Mid-market private equity firm LDC has backed the GBP22m management buyout of global ID cards business, Magicard, from listed defence and security group Ultra Electronics Holdings plc.
Founded in 1992, Magicard is one of the world’s leading manufacturers of secure desktop ID card printers, software and related consumables for the identity and access control markets. Its products, which include direct-to-card and retransfer printers, are capable of printing and encoding all types of card format, including magnetic stripe, proximity cards and ‘chip and pin’ cards used in the banking sector. Magicard printers are renowned for their built-in card security features, including the patented HoloKote secure watermark.
With an installed base of more than 70,000 printers globally, the business’ end users include major private and public sector organisations around the world. Its products are used to print staff identify cards for NHS England and to help secure global summits, including the G20.
Based in Weymouth, Dorset, the business operates sales offices in the UK, US, Dubai and China. Over 70% per cent of its GBP19.3 million revenues comes from international markets, where it sells to more than 100 countries.
The global market for secure desktop ID printers is forecast to grow at a CAGR of 6 per cent between 2014 and 2019, thanks to increasing focus on identity authentication amongst corporate and government organisations and localised, instant issuance.
Following LDC’s investment, the business plans to focus on driving sales of its new Helix retransfer printer and increasing its expansion into new international markets.
The MBO was led by CEO Andy Matko. As part of the deal, senior members of the management team have acquired a minority shareholding, with LDC investing for a significant majority stake. Magicard will continue to operate from its existing facilities and all employees will remain with the business as part of the transaction.
The deal was led by Investment Directors Gordon Hague and Chris Neale who join the board, supported by Investment Executive Aylesh Patel. Chris Thomas has been appointed Non-Executive Chairman.
Matko says: “This is exciting news for Magicard and our global network of loyal partners. This deal, along with the recent development of our Helix retransfer printer, gives the management team the opportunity to drive the business forward as owners and unlock the potential of the business, developing new products and targeting new geographies. LDC’s investment adds the capital we need to accelerate our expansion, as well as a strategic partner who understands and supports our ambitions for the future.”
Gordon Hague, Investment Director at LDC, says: “Magicard is an innovative international business with a strong brand that has successfully grown thanks to a commitment to new product development and excellent customer service. Its market-leading products are trusted by some of the world’s most security conscious organisations and with security remaining high on the corporate and government agenda, demand for high-integrity, cost-effective solutions will continue to provide significant growth opportunities across its key markets and geographies.”
Chris Hurley, Chief Executive Officer of LDC, adds: “We have been working closely with the management team at Magicard and the M&A team at Ultra for some time, leveraging the scale and expertise of the LDC team to prepare the business for investment. It is exciting to have arrived at this point.
“Transactions like this create a mutually beneficial outcome for both parties, releasing funds for the parent company whilst creating a new independent business with a highly incentivised and energised management team. LDC has a fantastic track record of success in backing corporate carve-outs and we expect to see more M&A activity like this over the coming months as corporates look to refocus on their core business and raise capital from divestments.”
The transaction is subject to US regulatory approvals. Assuming satisfaction of all closing conditions and approvals, the transaction is expected to close towards the end of the second quarter of 2016.
LDC was advised by Duff and Phelps, CIL, RSM and CMS Cameron McKenna. Ultra Electronics Holdings plc was advised by KPMG and Osbourne Clark while management were advised by Liberty Corporate Finance and Shoosmiths.
