PRIVATE equity group ECI Partners has snapped up a majority stake in XLN Telecom, the UK’s largest provider of fixed-line, mobile and internet services to small businesses.
ECI has backed the current management and has pledged to inject funds to double the size of the business.
The firm bought the controlling stake from Zeus Private Equity for an undisclosed fee. However, City A.M. understands Zeus received a multiple of 4.5 times its initial investment of £6.63m, valuing the stake at approximately £29.8m.
Niche telecoms provider XLN has seen its revenue grow from £27m in 2007 to £54m this year.
Tom Wrenn, who led the deal for ECI, said: “XLN is a superb growth business in a sector that has performed strongly during the recent downturn. It is led by a high-quality management team that has a clear vision for the future. XLN has considerable scope to add more products and services and is in an excellent position to act as a platform for consolidation in the fragmented telecoms market. We will provide additional capital to continue to grow the business.”
Christian Nellemann, chief executive of XLN Telecom said: “We have been able to transform a niche and historically overlooked sector of the market.
“We now have a highly profitable and scalable business that will allow us to rapidly expand the range of services we deliver to the small business market. We are delighted that ECI will be a key part of the firm’s next chapter.”
FAST FACTS | ECI
● ECI manages private equity funds with a capital base of over £880m and has provided funds for over 250 companies.
● It specialises in buyouts, buy-ins and development capital deals of £10m to £150m.