Close completes IT buyout

Close Growth Capital, which provides combined equity and debt funding to UK mid-market companies has backed the £30m MBO of Pragma and Real Time, the UK IT services operations of the French listed IT firm Sword Group.

The new company, which is to be called Amor Group will become the largest independent IT company in Scotland, with revenues of £32m and a staff of 330 based in Glasgow, Aberdeen, Edinburgh, London and Houston. Sword Group retained a minority interest.

The buyout involved the senior management team of John Innes, Scott Leiper and David Blyth and was also backed by Scottish Enterprise, the regional investment fund and Clydesdale Bank.

John Innes will become Amor’s CEO with David Blyth and Scott Leiper taking on the roles of FD and COO respectively. Expansion plans for the newly created group include growing turnover to £50m over the coming three years as well as employing a further 50 staff by the end of 2009.

Aberdeen-based Pragma provides IT operational support and disaster recovery services for infrastructure and oil and gas specialist software applications. Real Time, based in Glasgow provides IT services to the oil and gas, aviation, telecommunications, utilities and the public sectors. Both firms will continue trading under their own brands and count BAA, Total and BP amongst their clients.

John Innes commented “To attract this level of institutional support in tough economic conditions is a measure of the confidence that investors have in Amor’s ability to deliver our business plan. Pragma and Real Time will give Amor the ideal platform for organic and acquisitional growth and assures continuity of service quality for our customers by maintaining our existing people, ethos and values’

Director of Close Growth Capital (CGC), James Blake, said that the management team had a ‘sensible but ambitious strategy for growth’. He added ‘We were also attracted to the company’s potential to act as a consolidation platform during what we expect will be an exceptional time to acquire small players with specialised knowledge at discounted multiples. Most importantly, we have been very impressed with the quality of both the senior management team and business unit directors’.

Other recent deals for CGC include the sale of the designer and manufacturer of audio mixing consoles, Allen & Heath to D&M Holdings of the US in April 2008. The sale was the first realisation from CGC’s fund II and represented a return of 40% IRR achieved within 2 years of the initial investment. In March last year, CGC also backed the £12m secondary buyout of food distributor Blueberry Group from 3i.