Shard Credit Partners provides a £8.75 million senior secured unitranche financing for the acquisition of The Technology Group by Gradwell Communications, an investee company of Chiltern Capital.
Shard Credit Partners has provided financing of £8.75 million in support of the acquisition of Technology Solutions Group Limited, trading as The Technology Group (“TTG”), by Gradwell Communications Limited (“Gradwell”), an investee company of Chiltern Capital, a private equity firm.
TTG, headquartered in Leeds with 30 staff, was co-founded by father and son team David and Jonathan Marsden in 2011. The business serves a diversified customer base of over 890 SMEs through its provision of a comprehensive end-to-end cloud-based communications offering across Voice over IP, video, chat and collaboration technologies. TTG’s target market is UK SMEs with up to 250 seats as well as larger enterprises such as current customers Sage plc, the NHS Leadership Academy and Specsavers. TTG achieves high levels of customer satisfaction through its role as a strategic partner to clients and its offering has excellent functionality at a competitive price point.
Gradwell which has 73 staff and is based in Bath, Somerset, is a UK focused provider of hosted telephony, connectivity and cloud-based software as a service to SMEs. Gradwell serves a diversified customer base of over 7,800 SME customers. The business provides both 3CX cloud telephony software as well as its own proprietary WAVE software platform and primarily serves customers with up to 50 seats. These services allow SMEs to transition smoothly and efficiently to a flexible, scalable remote working setup with cloud-based functionality that is almost disaster-proof. Gradwell has been operating in the hosting market since its formation in 1998, subsequently developing a SaaS telephony offer in 2004.
Following this strategic acquisition, the combined entity (the “Group”) will provide a comprehensive end-to-end, cloud communications offering across services such as hardware sourcing, private hosted phone systems, business lines and call packages, connectivity and SIP Trunks. The Group will benefit from an overlap in services and technology platforms which will foster achievable synergies and cross-selling opportunities. The acquisition of TTG will place the Group in a strong position to capitalise on the rapidly growing UK cloud communications market, which is forecast to grow at c.18% per annum to an estimated value of £2.1 billion in 2025[1]. The business combination increases the Group’s sweet-spot target market to c.£500 million this year as the Group will roll out high quality solutions across a broader customer base.
Simon Curry, CEO of Gradwell Communications said: “We are excited to have completed this acquisition and welcome TTG to the Group. TTG was our prime acquisition target with a highly complementary proposition offering which serves to broaden the Group’s overall market reach. They have established market-leading capabilities within provisioning and servicing larger 3CX customers; with this transaction, we also can lever Gradwell’s own IP across the wider Group with a clear line of sight of available synergies”.
Alastair Brown, CEO of Shard Credit Partners, commented: “We are delighted to have been able to provide financing support to Chiltern Capital and Simon Curry and his senior management team at Gradwell for this transformational acquisition of TTG. The combination of these two businesses is based on solid commercial rationale and will enable the creation of a clear market leader in the rapidly growing hosted telecommunications market for UK SMEs nationwide”.
David Butler, Investment Manager at Chiltern Capital said: “Cloud communications has performed strongly during the last 12 months as more customers have moved from on-premise, fixed line systems to VoIP. Bringing TTG and Gradwell under the same ownership creates a compelling UC offering for both SME and mid-market customers. We are pleased to partner with Shard Credit Partners in acquiring TTG and look forward to supporting the combined business as it capitalises on its strong market position, scale and growth momentum.”
Legal advice to Shard Credit Partners was provided by Gateley Legal, led by Partners Andrew Madden and Andrew Cowan who were supported by Christian Wiltshire. Legal advice to Chiltern Capital was provided by Marriott Harrison, led by Andrew Ross and Brett Israel.
Business and transactional tax advice was provided by Ryecroft Glenton’s Business Tax Partner Simon Whiteside and Director, Simon Hopwood. Financial due diligence was provided by HMT Corporate Finance, led by Paul Read.
Shard Credit Partners’ strategy is to become a leading provider of capital to entrepreneur and management-owned companies and private equity-owned companies focused on achieving transformational growth and expansion in the UK regions. In the past two years, Shard Credit Partners has invested more than £117 million in supporting regional Management Buy-Out transactions and M&A buy-and-build acquisition strategies, as well as growth capital expenditure financing. This transaction with Chiltern Capital represents the first transaction by Shard Credit Partners for a private equity-owned business.
[1] Source: Cavell Group Q2 2020 UK Cloud Communications Report
About Shard Credit Partners:
Shard Credit Partners is an alternative investment fund manager focused on private credit strategies in the UK lower mid-market. Its funds seek to generate superior risk-adjusted returns from conservatively structured senior secured credit investments at low leverage, benefiting from robust documentation and a full suite of financial and non-financial covenants.
Shard Credit Partners is currently investing from its debut direct lending fund Shard Credit Partners Fund I, which held a first close in October 2017 at £90 million. Shard Credit Partners plans to hold a first close on its second UK lower mid-market direct lending fund during the second half of 2021.
Shard Credit Partners invests in solid small to medium sized businesses with strong management teams, supporting them by providing transformative growth capital and event driven financing in support of innovation, growth and expansion. The fund invests in businesses across all sectors and throughout the UK.
The firm has a strong ESG focus; in particular, it is a strong supporter of female entrepreneurs and firms with meaningful female leadership, ownership and senior management.
Recent investments include the MBI of JST Services Ltd in Scotland, the MBO and buy-and-build strategy of eQuality Solutions Ltd in the North-East of England, and the MBO of Chameleon Technology Ltd in Harrogate, North Yorkshire, each of which completed in December 2020.
In 2020, Shard Credit Partners ranked eighth in the Debtwire UK Direct Lender league table published by Acuris.
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