Music Magpie to take off as LDC invests £10m

MUSIC Magpie, a rapidly growing online business which buys and resells unwanted CDs, DVDs and computer games, has received a multi-million pound investment boost from private equity firm LDC.

The deal will see former Asda and Royal Mail boss Allan Leighton joining the board of Macclesfield-based Magpie Entertainment, which trades as musicMagpie.co.uk, as chairman.

LDC declined to confirm the size of its investment, but sources close to the transaction indicate it has invested £10m for a minority shareholding. 

Founded in 2007 by chief executive Steve Oliver and chief operating officer Walter Gleeson, Music Magpie has seen dramatic growth.

Sales in 2009-10 from from £2.5m to £11.3m and are expected to hit £30m in the year to the end of May. Earnings are expected to have increased from £1.5m to £4m in the same period.

The company now employs more than 500 people and serves customers in over 80 countries around the worldwide.

Development funding from LDC will allow the company to advance its online purchasing and sales capabilities overseas. A series of consumer marketing campaigns in key central European countries, will also be launched.  Further investment in the company’s IT infrastructure will also occur.

The company’s valuation engine software is unique and allows it to offer consumers an individual price for each CD, DVD and game they want to sell.

These are then sold through a range of online, retail and wholesale channels with a large proportion being traded internationally.

Chief executive Steve Oliver, 40,  said: “Consumers are increasingly looking to sell their unwanted CDs, DVDs and Games online, because the service we offer is easy and free to use, which means de-cluttering their homes is hassle free and they make some extra cash too.
 
“The next phase of our international expansion has already begun with the launch of our German website, which is already showing some very encouraging results.

“With the backing of LDC, an investor renowned for developing international opportunities for its portfolio businesses, and with the contribution to the team by Allan Leighton, we hope to further develop the musicMagpie.co.uk brand and our strong trading performance in the UK, in other countries.”

LDC investment director Jonathan Bell, who is joining the company’s board  added: “musicMagpie.co.uk holds an enviable and unique industry position, and has enjoyed significant growth in recent years as a result of its motivated, industry experienced management team, targeted consumer marketing, and leading IT systems.

“The company is well placed to further penetrate the UK and overseas markets and continue its rapid expansion.”

New chairman Allan Leighton, said: “I look forward to working with the business’ dynamic and entrepreneurial management team, who have positioned the business well for the next phase of growth that will see the company accelerate its international sales and increase its share of the UK replay CD, DVD and Games categories.”

LDC were advised by a team from law firm Pinsent Masons led by Gregg Davison, while Richard Harding and Stuart Thwaites from Ernst & Young performed financial due diligence.

Eversheds advised management and Andy Westbrook led a team from Deloitte on the corporate finance side.