Inflexion generates 4.4x return on sale of Red Commerce
Inflexion Private Equity, the mid-market private equity investor, is pleased to announce the sale of Red Commerce Limited (“Red”), the global IT resourcing specialist, in a Secondary Buyout to Dunedin for a headline valuation of £44 million. Red supplies SAP consultants to multi-national corporations on mid-term consulting contracts, permanent placements and through its hybrid consultancy business RedSolutions. The exit represents a multiple of over 4.4x for Inflexion’s investors (34% IRR) and is Inflexion’s eighth exit from its 2003 Buyout Fund.
Inflexion led the £15m MBO of Red in December 2005 and was represented on the board by Simon Turner and Andrew Mainwaring. Throughout Inflexion’s ownership the business accelerated its international expansion, opening offices in Munich, Zurich and Stockholm, invested heavily in its business development function and developed a unique “consultancy” service line, RedSolutions. Since Inflexion’s investment Red’s profits have grown by 113% (CAGR: 16.3%) and the business is now operating with a record number of contractors and employees (staff numbers have increased by 40% since acquisition).
The sale process was led by Andrew Mainwaring, Investment Director of Inflexion Private Equity, who commented: “We are proud that during the period of our ownership Red has more than doubled in size, materially expanded its geographic reach, deepened its service offering and negotiated the toughest trading period in recent history unscathed. The company is now in a position to move onto the next stage of its development and we wish the team every success in the future”.
Richard Vercesi, CEO of Red Commerce and a lead member of the Secondary Buyout Team, said: “Inflexion has been an ambitious and proactive investor and has fully supported the management team in developing the business so effectively over the last five years”.
Red and its shareholders were advised by Hawkpoint Partners Limited (financial advisor) and Jones Day (legal advisor).