Exit announcement - Advanced Electronics
1 May 2014
We are delighted to announce the sale of leading fire systems manufacturer, Advanced Electronics, to Halma Plc, a FTSE 250 company that provides products for hazard detection, life protection, personal & public health improvement, and environmental protection.
- Net return of 8x investment
- Exit date: May 2014
- Legal advisers to Connection Capital: EMW
The initial cash consideration in the transaction is £14.1m, delivering to our clients an initial 7.2x money return, although additional payments of up to £10m, determined by earnings growth to March 2015, will be made later this year and next, and will likely result in a total return of between 8x and 10x the original investment (i.e. £160,000 – £200,000 for each £25,000* invested).
For those of our clients who invested under EIS (Enterprise Investment Scheme), their sale proceeds will be free of Capital Gains Tax. This CGT exemption is in addition to the income tax break (20%) they received at the time of the original investment.
The original investment, made in 2003, was led by Bernard Dale, co-founder and Partner in Connection Capital. The funds provided management with the capital they needed to support the company’s international expansion. Based in Cramlington, Northumberland, and marketing to over 60 countries worldwide, Advanced Electronics is now recognised as a world leading supplier of fire systems including alarm control panels; fire systems; fire paging; and suppression & extinguishing control systems.
The company has grown significantly since the investment was made and now has a team of 125 with additional offices in the US, Dubai and India. Projects to date include The Shard, Waterloo, St Pancras and Edinburgh Waverly stations, Millenium Stadium and Westfield shopping centre.
Led by the incumbent management team, sales have grown from £1.2m at the time of investment in 2003 to £14.6m in 2014. The management of Advanced remain in place and will continue to operate the company as a stand-alone business within Halma’s Infrastructure Safety division.
“We backed an experienced team and as a result of their hard work and world class products, the company has grown significantly into a global, market leader in this sector. This deal is a great example of the level of returns that are achievable for investors in private equity which, as demonstrated by our clients, is no longer the preserve of institutional investors.” - Bernard Dale, Partner
*Income tax relief in 2003 on EIS qualifying investments was 20% which means that for each £25,000 invested, investors received a tax rebate of £5,000 and, as such, a net cost of £20,000.
If you are interested in receiving more information about future investment opportunities and are not yet a client of Connection Capital, please contact Steve Wilson.