LDC strikes again with £15m Metronet buyout

WIRELESS internet service provider Metronet (UK) has been snapped up by private equity investor LDC  in a deal understood to be worth £15m.

The deal for the Manchester Science Park-based company is LDC’s fourth in the North West this year, and will allow Metronet’s long-term backers Acceleris and private equity investors YFM Equity Partners to exit.

As part of the deal, LDC is investing £11m of equity funding for a majority equity stake, which includes funding to grow the business. The Metronet management team led by US-born chief executive Elliott Mueller are remaining with the business.

Metronet (UK) provides business-critical data infrastructure to more than 500 UK companies, from SMEs to large corporates such as Laing O’Rourke and Grant Thornton. It made operating profits of £2.2m on sales of nearly £6m and employs around 50 people.

Services include high-speed connectivity such as wireless and fibre leased lines and metropolitan Ethernet networks, managed services, such as voice over internet protocol (VoIP), co-location and managed hosting, and wireless-leased data services to support CCTV systems – customer of this part of the business include Greater Manchester Police Authority.

 
It was founded in 2003 by James McCall, operations director, Roy Davies, finance director, Bill Riordan, business development director, and former chairman, David Ashmore.

In the last nine years, using a combination of traditional optical fibre and high speed wireless technology, Metronet has built one of the most powerful and reliable IP networks in the UK.

With the backing of LDC, Metronet (UK) now plans to accelerate growth by expanding the capabilities and reach of its hybrid network across the UK, expanding its sales and marketing function and further investing in its infrastructure and services.
 
Elliott Mueller, said the deal is an “important step” in the development of the company.

He added: “Acceleris and YFM Equity Partners have supported the business from a start-up to becoming the largest hybrid Internet service provider to businesses in the UK.

“This has provided a strong platform for further expansion at a time when business’ requirements and demand for service quality continue to increase, driven by the acceleration of cloud computing and increasingly data-dependent business models and operations.
 
“In LDC, we now have a single institutional investment partner who has the confidence and expertise to take the business forward with us.”

It is understood that YFM Equity Partners made a return of 5.5 times its original investment on the exit.
 
Investment directors Jonathan Bell and Simon Braham led the deal for LDC’s Manchester office.

Mr Bell said: “Metronet (UK) has the ideal growth characteristics – a capable and ambitious management team, a clearly differentiated model, the best customer service in the industry and strong market dynamics.
“With a more streamlined and focused investor base, it has the opportunity to achieve its goal of becoming the UK’s market leading provider of independent, managed wide area networking services to business.”

Altium advised LDC and Newco, led by managing director Stuart Lees and supported by Phil Frame and Elin Sion.

Carl Houghton, partner and head of Clearwater’s TMT team, advised shareholders of Metronet (UK) on the transaction and was supported by assistant director Andy Strickland.

Law firm Gateley (Paul Jefferson and Jemma Bolton) provided legal advice to LDC and Newco, while Eversheds (Alasdair Outhwaite and Ed Bartlett) advised Metronet (UK)’s shareholders and the on-going management team.
 
LDC’s three other North West investments this year are Airline Services Limited, corporate travel management company TD Travel and Bifold Group.