By Tom Keane
The Independent

Sir Richard Branson’s Virgin Group pocketed more than £131m yesterday after selling its online train ticket booking business, Trainline, to the private equity group Exponent for £163m.

Virgin owned 80.5 per cent of Trainline, National Express 14 per cent and Stagecoach the rest.

Last month, Virgin confirmed long-standing speculation that it was looking at either selling or floating the business. The investment banks ABN Amro and Investec examined a flotation, an option stymied by the recent turmoil in global equity markets.

Meanwhile, the corporate finance boutique New Boathouse Capital conducted an auction among more than a dozen private equity groups. It had been hoped that Trainline would fetch up to £200m after a flurry of internet companies, including the property website Rightmove.com, commanded impressive valuations at sale or on flotation. Difficult markets have seen valuations scaled back for companies in play.

Sir Richard said yesterday: "We are delighted that Trainline has gone to such a good home. We nurtured the business through the dotcom boom and crash and always had confidence that it would play its part in the internet ticketing revolution that is now taking place."

Founded in 1999 by Alan Tomlin, its chief executive, Trainline now operates retail websites for 16 of the 21 train operating companies. In the year to the end of March, it sold £400m of train tickets. It is the second business sold by Sir Richard in as many months.

In May, he sold a near-50 per cent stake in the record label V2 to the American investment bank Morgan Stanley to defuse a potential conflict of interest as the biggest shareholder in the cable company NTL, which is planning to launch a music TV channel.

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By Peter Smith
Financial Times

Trainline, the online rail ticket retailer owned by Virgin Rail, National Express and Stagecoach, is to be sold to Exponent Private Equity in a deal valuing the group at £163m, including debt.

The purchase was led by Tom Sweet-Escott, the veteran 3i dealmaker who, with three colleagues, broke away from the FTSE 100 private equity group in 2004 to launch Exponent.  

Mr Sweet-Escott said Trainline sold about £400m worth of rail tickets last year and handled ticket sales for 16 of the UK’s 21 train operating companies.

It generated earnings before interest tax depreciation and amortisation of £11.7m in the year ended March 2006.

Virgin had considered floating Trainline, a process that might have been derailed by stock market volatility.  A float is a likely exit route for Exponent, which has now invested roughly half its £400m fund in five deals.

Trainline, launched in 1999, is the UK’s dominant internet retailer of long-distance train tickets.

It also operates websites and call centres for train operating companies.

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By Rebekah Curtis
Reuters News

LONDON, June 21 (Reuters) - Exponent Private Equity said on Wednesday it had bought online British train ticket company Trainline for 163 million pounds ($300 million) cash.

Exponent acquired Trainline from a group of shareholders that include Richard Branson’s Virgin Group, Stagecoach and National Express Group Plc.

National Express owned a 14 percent stake in the firm and will make a 9 million pound profit on the sale, Exponent said.

Trainline was launched in 1999 to sell UK rail tickets through the internet and call centres. In 2004, it acquired its rival QJump from National Express Group.

It operates the website thetrainline.com, retail Websites for 16 of the 21 train operating companies and travel services to blue chip corporations and travel agents, Exponent, which focuses on mid-market UK firms, said in a statement.

Exponent was not immediately available to comment on its plans for the business but one source close to the situation said the private equity firm was considering a flotation of the firm, but gave no specific timeframe.

In the year to March 2006, Trainline notched up revenue of 47.5 million pounds and earnings before interest, taxes depreciation and amortisation of 11.7 million pounds.

Sir Richard Branson, Virgin’s chief executive and chairman, said the Association of Train Operating Companies had been encouraging Virgin and the minority shareholders to divest their interests in Trainline to provide it with greater independence from any individual train operator.

"Today’s deal with Exponent has been welcomed by the industry and provides Trainline with a solid platform for further growth," Branson said in the statement.

Branson, whose Virgin Trains ticket booking website will continue to be run by Trainline, recently appointed investment banks ABN AMRO and Investec to advise on the possibility of floating Virgin’s share in the firm, before eventually opting to sell to private company Exponent.

Exponent’s biggest deal to date was the acquisition of TSL Education business, which publishes the Times Educational Supplement newspaper, from Rupert Murdoch’s News International for 235 million pounds ($415 million) at the end of 2005.

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Exponent Private Equity today announces its investment in Group GTI, the graduate recruitment publisher and online application systems provider in Europe.

GTI provides high quality careers information to graduates and postgraduates through sector-specific printed titles, online products and events in the UK, Ireland, France, Germany, Malaysia and Singapore. The company publishes over 90 paper titles a year, including the market leading TARGET family of careers publications, the doctorjob magazines and the gradireland titles. In Germany GTI trades under the highly respected Staufenbiel brand. Websites include www.doctorjob.com , www.gradireland.com and www.staufenbiel.de . The worktools division provides online application systems to aid the recruitment process for many leading organisations.

The company was launched 18 years ago by founders Mark Blythe and Adrian Wood, and currently employs 120 people.

John Weeks will join the firm as chairman and will work alongside Mark and Adrian to grow the business. John was formerly chief executive and is currently chairman at Mintel International Group, the information publisher, where he has overseen very significant growth in recent years.

The initial investment from Exponent and Barclays Bank will be used to help fund the growth of the business into broader UK, Irish, French and German markets.

The Exponent team commented, “The graduate recruitment sector will continue to grow as employers compete for the best graduates. GTI has been the market leader in targeted careers information and we believe this sector will show considerable growth. The company has a strong business model and the combination of the founders and their management team together with the appointment of John Weeks provides an excellent opportunity for the company to capitalise on the considerable market opportunity”

Adrian Wood and Mark Blythe, joint managing directors Group GTI, said, “This partnership is the next step in our 2010 goal of becoming the dominant graduate recruitment publisher and services provider internationally. We are really looking forward to further growing Group GTI with Exponent. The greater resources and financial expertise will enable us to maximise the potential of the business.”

John Weeks, chairman, Group GTI, said, “GTI is poised for significant growth in the UK and internationally, and I am very excited to be a part of this great business.’

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By Dan Penny, Analyst,
Electronic Publishing Services

Magicalia is an example of a company that put aside its early disappointment that the dot.com bubble burst so soon, and patiently waited several more long years for the online market to become truly valuable.

The wait is over, as Magicalia’s sale price shows: the amount that has been paid is reported to be UKP13m.  The company was formed in 1999, and valued at only UKP3m in 2001, so Exponent clearly thinks that the time is ripe for Magicalia to demonstrate its real potential.  Exponent has announced that this is first of a series of acquisitions it will make to create a larger group of publisher titles.  This would seem to indicate that the movement of print magazines towards a greater online presence is reaching a tipping point.  Until now, many consumer magazines have almost ignored the web - in complete contrast to the way in which newspapers are being forced to reinvent themselves.

Magicalia produces web sites for consumers, specifically in sports areas like biking and fishing, and lifestyle areas like parenting and hi-fi.

www.bikemagic.com, the first web site Magicalia built, contains everything the mountain biking community could need.  There are announcements and news on races, reviews of equipment by experts and by the site’s users, articles on bike maintenance and riding technique, a second-hand ads section and of course the obligatory forums for biking enthusiasts to talk to each other.

To pay for it all, there are links to manufacturers, plus reasonably unobtrusive corporate sponsorship logos and display ads.  The site is an example of how to wring every last drop of community content from an industry, and the web-friendly demographic of mountain biking users suggests it is particularly appropriate to do so in this case.  These are users who want to find reviews for equipment and then purchase online, so cleverly pitched and attractive online ads can even add to the value of the site in the eyes of the user.  The other sites that Magicalia publishes all follow the same vein and use the same engine, whether they are targeted at golfers, sailing enthusiasts or surfers. This is an extremely efficient publishing model - providing that the engine behind it all is flexible enough in the first place.

Magicalia is confident that it is.  It operates its Magicalia Publishing Service (MPS) for print magazines which want to move online without building a site for themselves.  It publishes online versions of UK print magazines already, such as Runner’s World for NatMags, and has moved into B2B publishing with some portals for Earthscan.  Its expertise in maximising online advertising and community content will be tested in the B2B market, but it will be fascinating to see which of the online consumer publishing strategies apply in wha back to top

Private Equity News

Exponent, the UK private equity firm set up by four ex-3i partners, has bought Magicalia, an online publishing group, for £13m.  Magicalia operates over 40 web sites, covering subjects ranging from sports to parenting, and an e-commerce operation.  It is only the third deal from Exponent’s £400m first fund, which closed in August 2004, but it is the second this quarter.

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The Sunday Telegraph

Magicalia.com, one of the largest publishers of community websites in the UK, has been acquired by Exponent, the private equity company, for £13m.  Magicalia publishes titles such as thinkcamera.com.  Exponent, which also owns the Times Educational Supplement, will provide capital for online magazine acquisitions.  The deal is Exponent’s third since it was founded 18 months ago by a team that defected from 3i, the listed venture capital group.

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Financial News online

August Equity, the former Kleinwort Capital mid-market buy-out firm, has agreed the £82m (€118m) sale of Discovery Group, which trades as Durrants Media Monitoring, to rival firm Exponent Private Equity. August Equity backed Durrants’ chief executive Stephen White in a £14m management buy-in at the company in 2000.

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by Jonathan Braude in London,
TheDeal.com

London buyout shop Exponent Private Equity LLP has made its second acquisition of a media property since its 2003 founding, buying media monitoring and evaluation agency Discovery Group Ltd., which operates as Durrants Media Monitoring. The seller, formerly named Kleinwort Capital Ltd., made 6 times its cash in a deal that values the company at £82 million ($142 million).

Kleinwort announced on March 13 that it has changed its name to August Equity Ltd. to reflect the fact that Dresdner Kleinwort Wasserstein, one of its founding joint venture owners, has now exited the business after selling its £60 million stake in the firm’s Kleinwort Capital Partners IV fund to Switzerland’s Partners Group and F&C Private Equity Trust plc.

August, which specializes in midmarket companies, said it made an internal rate of return of 35% on Durrants, which it bought for £14 million in 2000, with an equity investment of £9 million.

Founded in 1880, London-based Durrants provides services to public relations managers, monitoring around 6,000 print, broadcast and online sources to about 2,300 clients, including corporate communications units inside companies, PR firms, and government bodies. Since the buyout, according to Andrew Hartley, a managing director at August Equity, it has increased revenue from £7 million a year to more than £20 million and profit from about £1 million to about £7 million. Kleinwort Capital also helped the company raise £2.5 million to fund the development of a digital technology platform.

"We helped transform Durrants from a traditional scissors-and-paste operation to a modern digital business," said Hartley in an interview.

The deal is Exponent’s second since it was established at the end of 2003 by a team of former 3i Group plc executives and raised a £400 million fund. Late last year, it paid £235 million to buy TSL Education Ltd., a specialist group of education newspapers, from Rupert Murdoch’s News International plc.

Although both deals are from the media sector, an Exponent spokesman said this was not evidence of a particular media focus and there was no plan to bring the two very different businesses under one roof. He said the plan was to continue growing Durrants, both organically and possibly by acquisition.

August was advised by Dominic Wallis of N.M. Rothschild & Sons Ltd. and the law firm Macfarlanes. Exponent received counsel from DLA Piper Rudnick Gray Cary and Travers Smith. Barclays Bank plc and Bank of Ireland plc provided debt.

 

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AltAssets.

UK lower mid-market tprivate equity firm August Equity, previously known as Kleinwort Capital, has agreed to sell its portfolio company Discovery Group, which trades as Durrants Media Monitoring, to Exponent Private Equity for £82m.

August Equity backed Stephen White in the £14m management buy-in of Durrants in 2000.

Durrants is a UK media monitoring and evaluation agency. It monitors around 6,000 print, broadcast and online sources to service 2,300 clients across a broad range of sectors including corporate organisations, public relations agencies and governmental bodies.

August Equity managing director Andrew Hartley said, ’We have been delighted with Durrants’ growth and expansion over the last six years and have enjoyed working with and supporting Stephen and the management team in transforming the business into a sophisticated player in today’s market via technology and a planned organic growth programme. With Exponent’s backing, we are confident that Durrants will see further future growth.’

August Equity focuses on investing in UK growth companies valued between £10m and £100m in the media, technology, healthcare and specialist manufacturing sectors.

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