3i makes 4.9x its money on Azzurri

3i has made its ninth exit this year with the sale of Azzurri to PPM Capital (PPM) for £182.5m. According to the fund the £115m proceeds from the sale represent an IIR of 38% and a money multiple of 4.9x the initial investment.

Azzurri, the UK consultancy and reseller of voice and data technology, was formed in June 2000 after a £25m majority investment by 3i. After a tricky start on the eve of the bursting technology bubble, the company has grown successfully through organic rollouts, and most significantly through 15 acquisitions to date.

Martin St Quinton, chief executive of Azzurri says: “The three years after the bubble burst was an excellent time to buy businesses. We had plenty of cash and prices were low.”

The company was sold by 3i through a dual-track process and, according to Julian Davison, a partner in 3i’s European buyouts business: “We didn’t have a particular view which way we wanted the sale to go. The listing process was at quite an advanced stage by the time we decided to sell to PPM.”

The selective auction process, which did not include trade buyers, comprised seven private equity houses in the first round and three in the second.

“We only dropped the IPO process last week when it became crystal-clear that we were going to do a secondary,” says St Quinton “We were not keen on a trade buyer at this point; we felt the business would be best served over the next three or four years as a public company or as a secondary. We went with PPM in the end because we felt they best understood and supported our strategy going forward. We want to do a lot of acquisitions and in private this process tends to be more nimble.”

PPM is a mid-market house with £2bn under management and business services is one of its four chosen sectors. According to St Quinton, with a sale agreed the “acquisition file has been reopened and we are already working on a number of deals. The general plan is business as usual.”

3i and Azzurri were advised by Citigroup and PPM by Catalyst.