• Senior management team increases its shareholding in 120-strong digital agency
• Funding package from HSBC and Frontier Development Capital values the business at £30 million
Frontier Development Capital (FDC), a new Manchester-based funder focused on supporting regional business growth across the UK, has made the first investment from its newly launched National Mezzanine Fund, backing the management buyout (MBO) of a digital agency in Yorkshire.
Yorkshire-headquartered digital agency Ingenuity Digital Holdings Limited (IDHL) has completed a management buyout (MBO) of the business supported by a funding package from HSBC and Frontier Development Capital (FDC).
The investments from HSBC and FDC follow a period of consistent growth for IDHL and a record financial performance in 2016, with revenues exceeding £10.5 million. The MBO, which values the business at £30 million, has provided an excellent return for exiting investors and enables the senior management team to become majority shareholders.
Founded in 2000, IDHL’s 17-year track record has seen it become one of the UK’s largest full-service digital agencies and the largest independent in the North, home to the Ingenuity Digital, WMG and NetConstruct brands. The business’ 120 strong team of experts deliver a range of digital services to clients including TNT, Coast and Radley, and have achieved numerous prestigious awards and recognition in the industry.
HSBC provided funding to facilitate the deal in partnership with FDC, a new funder focused on supporting regional business growth across the UK – this is the first investment from its newly launched National Mezzanine Fund.
Dennis Engel, Chief Executive of IDHL, said:
“This investment will help continue our ambitious growth drive and support our clients with innovative new products and services. It has been a transformative 12 months for IDHL with management appointments, new headquarters and a strengthening of our expert team. The MBO will help us keep up this momentum into the future. I’m delighted for the exiting investors and the employees who’ve benefited from their share options and I’m also pleased about the increased control and shareholding within the Business.”
Adam Kelly, HSBC’s Area Director for North Yorkshire & Humber, said:
“We are delighted to be supporting IDHL and its new owners, as it begins a new chapter in its history. The management team has an ambitious strategy to target new markets across the UK and increase its offering to customers. We look forward to seeing the business and its new management team continue to flourish.”
Ondrej Okeke, Regional Investment Director at Frontier Development Capital (FDC), said:
“This company is a perfect example of the type of business we are focused on supporting – a regional business with ambitious growth plans and a very credible management team.
“IDHL’s success to date has been based on its highly client-focused approach, underpinned by robust proprietary systems – with such a strong base and energy, we are looking forward to working with the team and seeing just how much they grow the business in the coming years.”
Andy Miller from Leeds-based Sentio Partners provided corporate finance services in relation to the transaction with Jonathan Jones and Andrew Fordham from Squire Patton Boggs providing legal advice to the company and management team. PwC provided financial due diligence and tax advice. Legal firms Eversheds Sutherland and Addleshaw Goddard advised HSBC and FDC respectively.