Henderson Private Capital has acquired Leisure Link from Duke Street Capital. In a GBP230 million funding package Henderson has acquired a majority interest in the business while Duke Street, which backed the deal with loan notes, continues to hold a small equity stake. The deal was supported by debt financing of approximately GBP150 million provided by NIB Capital Bank and Intermediate Capital Group. Leisure Link’s management team, led by CEO Russell Hoyle, is reinvesting most of its equity in the business.
A small portion of the financing package offered by Henderson Private Capital, part of the Australian financial services group, AMP, will be available to fund Leisure Link’s capital investments in the next five years. This investment is the fifth to be made from Henderson European Partners I, a 400 million fund dedicated to growth capital and mid-market buyouts in Europe. Toby Boyle, who heads Henderson Private Capital’s six-strong European private equity team, said around a quarter of the fund has been invested now. Other investments include a 12 million commitment to German company, Mega Radio, Media Partners, Mark IV and Corpnex.
Duke Street acquired Bass’s leisure machine management business (BLMS) in a GBP70 million MBI in August 1998. Caxton Iseman Capital Inc, and the Royal Bank of Scotland also participated in the deal. Under the ownership of Duke Street, Leisure Link has pursued a buy and build strategy, beginning in March 1999 when it acquired Stretton Leisure. The company has also acquired Maygay, a stake in E-Cast, and an equity interest in Lanarena. Leisure Link now manages 90,000 pay to play machines (casino gaming machines, video games, pool tables and juke boxes) in the UK’s leisure retail market. Its clients include Gala Clubs, Ladbrokes and JD Wetherspoon.
Boyle said: “Leisure Link has invested substantially. It is a very attractive company in a stable, cash generative industry.” He is also confident about the success of the company’s next generation product, itbox, which it launched at the beginning of the year. It provides a variety of activities such as film and sports clips and information, quizzes, a jukebox and a variety of web applications. Hoyle, CEO of Leisure Link, said: “Our new partners will give the business the financial firepower to take advantage of the opportunities that will result following the Gambling Review report and to exploit the huge potential in next generation machines.” The report produced by the Gambling Review Body increases the number of gaming machines, with higher jackpots, allowed in betting shops.
Other parties reported to have shown an interest in Leisure Link include Electra Partners, the Gala group, Legal & General Ventures, Littlewoods Leisure and Schroder Ventures. Duke Street appointed SG Hambro at the beginning of the year to look at future options, including a flotation, for Leisure Link.
Toby Boyle and Peter Taylor, managing director of Duke Street Capital, will join the board of Leisure Link.