Henderson Private Capital has acquired Leisure Link, the UK-based fruit machine company, from Duke Street Capital in a £230 million secondary buyout.
Duke Street has made a healthy return through the sale of its controlling interest in Leisure Link to Henderson Private Capital, which is investing through Henderson’s European Private Equity fund. This is the third successful exit secured from a leisure sector investment made by Duke Street’s 1997 fund.
Duke Street acquired Bass’s leisure machine management business (BLMS) in a £70 million MBI in August 1998. The investor will retain an equity interest and the management team, led by Russell Hoyle, is reinvesting most of its equity in the business.
The financing package offered by Henderson Private Capital, part of the Australian financial services group, AMP, includes funding for Leisure Link’s future capital investments over the next five years. NIB Capital Bank and Intermediate Capital Group supported the deal with debt finance.
Duke Street provided £30 million in equity for the MBI, Caxton – Iseman Capital Inc, and the Royal Bank of Scotland also participated in the deal. In March 1999 Leisure Link began a programme of debt-financed acquisitions when it bought Stretton Leisure from Greenalls for £28.5 million. The company also acquired Maygay, a designer and assembler of electronic amusement games, a stake in E-Cast, a US provider of content to broadband appliances outside the home and an equity interest in Lanarena, a networked PC gaming business. 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.
At the beginning of the year the company launched it’s next generation product, itbox, which 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.
Duke Street announced it was seeking a buyer for Leisure Link in May and interested parties are reported to include both trade buyers, the Gala group and Littlewoods Leisure and private equity firms, Electra Partners, Legal & General Ventures and Schroder Ventures. Other options explored by SG Hambro, appointed at the beginning of the year to help decide the company’s future, included plans for a possible flotation, which is still on the cards within the next three years.
Toby Boyle, head of European private equity at Henderson Private Capital, and Peter Taylor, managing director of Duke Street Capital, will join the board of Leisure Link.