Gresham makes 3.6x return on 2e2

UK mid-market firm Gresham has sold IT services provider 2e2 in a £130m to Duke Street Capital, generating a 3.6x return.

Duke Street Capital V will take a controlling stake in the Newbury headquartered business alongside the existing management team led by Terry Burt. 2e2 is a provider of IT services such as IT infrastructure, maintenance, networking, education and other managed services. Duck Street believes sees the company as a consolidator in what is a fragmented market.

Burt formed the business in 2002 along with chief operating officer Mark McVeigh and received backing by Gresham in July 2003. Since then it has since made nine acquisitions including the offshore IT services division of XKO, Prime Business Solutions and TBS, the UK-based IT services arm of Telenor. The last three years has seen group revenues have increase from £15m in 2003 to a forecast level of £155m this year.

The sale of 2e2 was Gresham’s third this year following the sale of Alstec to Babcock International Group which earned it a 4x return in May, and the sale of Altair to GE Energy in February. The firm closed its fourth fund in July on £340m.

This was also Duke Street’s fifth acquisition of 2006, coming a few months after it acquired Food Partners, a UK supplier of pre-packed sandwiches to food service operators, Deloro Stellite, an engineering firm, and the double purchase of Clinique Lambert and its subsidiary Clinique La Montagne as part of the firm’s buy and build strategy for Groupe Proclif.

2e2 will fit into Duke Street’s portfolio alongside its three other business services and outsourcing companies: Leisure Link, an owner and distributor of amusement machines, Wastelink Services , a waste collection, recycling and compliance outsourcing company, and Xafinity, formerly Hogg Robinson’s Benefits and Consultancy Services division.