Inflexion Private Equity backs £44m buyout of Eurotel

The UK mid-market firm Inflexion is looking for growth organically and through acqusitions from its investment in a UK telephony services provider.

Inflexion Private Equity, a UK mid-market private equity firm, has led the £44 million buyout of Eurotel Holdings, an independent provider of telephony services to small and medium-sized businesses in the UK. 

Eurotel was founded in 1995 and the management team was later backed by Young Associates, an IT and telecoms specialist, in 2005. Today Eurotel employs 300 people and serves more than 15,000 customers. Its core business includes phone systems, systems maintenance and fixed and mobile lines, calls and services.

Inflexion has invested £21.25 million taking a majority equity share holding. The management team and Young Associates have also invested, and a package of £21.5 million of debt facilities was committed by Acquisition Finance, Lloyds TSB Corporate Markets.

The management team, led by Chris Jagusz as chief executive, will remain in place.

Simon Turner, managing partner of Inflexion Private Equity, said: “It is a strong management team, which has successfully bought and integrated a number of smaller competitors.” He said as a platform play the plan was to find other businesses that either expanded the customer base or the product line.

The company operates in a significant market; the total spend on telecoms in the UK corporate market was more than £16.8 billion in 2006. Eurotel’s target market of small businesses with less than 50 employees comprises 1.2 million companies, employs 10.9 million people and spent over £2.6 billion on telephony services last year.

Turner said: “Owning the customer is an attractive place to be. Eurotel sits in the middle and as the market changes it can adapt its offering.”

Investec advised Young Associates on the sale alongside Oakley Corporate Finance.

Inflexion specialises in the UK sub-£50 million buyout market, making equity investments in the range of £5 million to £30 million. Last year was Inflexion’s busiest year to date as the firm realised two investments and completed four buyouts and two complementary acquisitions for its portfolio investments.