Barclays Private Equity (BPE) has backed a lb35 million management buyout of PC-PoS, a supplier of retail technology hardware and services. As part of the deal, BPE takes a 32.5 % stake in the new holding company, DigiPoS Systems Group Limited.
Founded in the UK in 1994 by Graham Worsfold, DigiPoS Systems Group now operates across 12 countries worldwide. The company manufactures and supplies a variety of well-known retailers with modular point-of-sale (POS) systems and peripherals, while also offering project management, consulting and engineering support services in most cases. It was in 1996 that DSG developed the first DigiPoS small computer for the POS environment for the retail sector. During 2003, the products were also approved for use with weighing equipment and certified to work on petroleum forecourts.
Paul Jules, local MD, says: "Our global installed base of more than 60 000 systems bears testimony to the growth in sales and popularity of the DigiPoS brand. We`ve also done remarkably well here in southern Africa, having sold more than 10 000 systems since we launched the product here just over six years ago."
Says Mark Taylor, of Barclays Private Equity who led the deal: "DigiPoS operates in a market that has experienced double-digit annual growth in recent years, with predictions that growth will continue at an annual rate of 15%. Continued high levels of consumer spending in the UK and US, and the eagerly anticipated recovery in Europe and other territories ensures that the outlook for retailers is healthy. The competitive advantage that retailers can derive from state of the art ePoS technology is expected to drive further upgrade of systems, many of which are seven to ten years old.
"The MBO provides the DigiPoS management team with the opportunity to exploit the market, continuing to increase turnover and profit as done in recent years, both organically and by acquisition," adds Taylor.
Tim Bittleston, CEO of the DigiPoS group, says: "We are delighted to have secured Barclays Private Equity`s backing to help us continue to build a profitable and unique business-to-business company, and to capitalise on the potential of a growing sector. Barclays Private Equity understands the business focus and believes in our growth plans and we look forward to working with them to enhance the DigiPoS brand and market share across our global operations."
The PC-PoS management team first approached HSBC Specialised Financing in London in December 2002 to discuss the viability of the MBO. Prior to this, HSBC in Basingstoke (UK) had supported the company over a number of years by providing acquisition and working capital finance to enable the business to enlarge its geographic reach and breadth of operations. HSBC obtained initial credit support before equity offers were received and advisors appointed. HSBC also had a number of telephone conversations at crucial points in the transaction with the previous majority shareholder in Johannesburg to assure that the transaction was fundable.
KPMG were appointed as financial advisors and HSBC worked closely with them and the PC-PoS management on the initial selection of potential funders. The headline funding for the deal worked out to lb35 million.
The target group was geographically very diverse and with an overseas parent, the complexities of the legals were considerable. A pragmatic view was therefore required on issues such as transaction structure and overseas security. Stevens & Bolton has acted for the company since its inception in 1994 and over that period the firm assisted with various fundraising and acquisitions, both in the UK and overseas, which have seen the DigiPoS group grow substantially to one with subsidiaries in 12 jurisdictions.
Says Keith Syson, partner at Stevens & Bolton: "As is often the case, there was a commercial pressure on the seller to dispose of its interest quickly and we were working to a tight timetable. The number of jurisdictions involved and the requirement to reorganise the group prior to completion added to the complexity.
"Acting for management, it was our in-depth knowledge of the group structure and its business that enabled us not only to advise on the equity investment but also to co-ordinate the legal advice required for each jurisdiction in order to effect the shareholding restructure. Working closely with KPMG, DSG management and the other advisers, we were able to bring the transactions to a timely conclusion within eight weeks of the initial involvement of Barclays.
"With the investment from BPE and the restructuring in place, I am confident that the foundations are now in place for the DigiPoS Group`s next stage of growth and we look forward to working with them to this end."
The transaction was project managed with advice provided by Adrian Dray of KPMG Corporate Finance. Other advisers to the deal included PricewaterhouseCoopers (market and financial due diligence) and Osborne Clarke (private equity legals).
Deal-makers:
Barclays Private Equity
HSBC Specialised Financing
KPMG Corporate Finance
Stevens and Bolton
PricewaterhouseCoopers
Osborne Clarke
Ashurst Morris Crisp
AON
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