Mid-markets news in brief

ECI Partners has bought Kelvin Hughs, a marine navigation technology manufacturer, from technology company Smiths Group for £52m (€72.5m). The transaction involves £48m in cash on completion in addition to a deferred payment of up to £4m based on performance. Management also invested alongside ECI in the deal. Royal Bank of Scotland provided debt financing, Capital Source Europe provided mezzanine.

ING Corporate Finance, Deloitte, SJ Berwin and Andeman advised ECI. Management was advised by Liberty Corporate Finance and Addleshaw Goddard. Kelvin Hughes’ products include radar sensors and display technology, voyage data recorders, electronic chart systems integrated bridge systems.

Graphite Enterprise Trust, a quoted investment trust managed by UK mid-market firm Graphite Capital, has sold its 46% stake in Huntress Group, a white collar recruitment specialist, to a Nomura-backed management buyout team. The sale, understood to be approximately £40m (€55.8m), along with a £13.5m refinancing in 2005 from Barclays, has provided the trust with an internal rate of return of 38.5% and 7.6 times the original 2000 buyout. Huntress provides permanent and temporary staff in the commercial (secretarial and office assistance), accountancy and finance and technology sectors, which combined account for a UK market worth of approximately £8.8bn in revenues. Under Graphite’s guidance, Huntress has rolled out the model to 17 offices across the UK and produced compound annual growth in revenue of more than 40% in the past five years.

3i backed Chorion, the UK-based owner and manager of classic and contemporary literary-based brands such as Mr Men and Noddy, has bought for The Copyrights Group, which owns the Beatrix Potter and Paddington Bear brands, among others for an undisclosed amount.

ECI has also agreed to sell Bounty for £70m (€97.6m) to Kaboose, the largest independent family-focused online media company in North America. Bounty also acts as a marketing and advertising platform in the UK, targeting new and expectant mothers. Through access with most UK-based hospitals and established relationships with brand owners, it says it reaches about 95% of the estimated 750,000 annual births in the UK. Bounty helps global advertisers reach this target audience through online media and direct marketing, a professional health network, product sampling, podcasting, photography and parenting guides. Since funding the MBO at Bounty in December 2004, ECI says it has helped Bounty more than double its profits.Bounty made Ebitda of £3.5m on revenues of £19.8m in 2006 and Ebitda of £3.2m on revenues of £17m for the nine-month period to the end of September 2007. For ECI, this exit will represent another successful transaction in businesses that have benefited from the growth in internet usage, following the recent sales of M and M Direct, LateRooms and Holiday Autos. ECI was advised on the sale by David Elms at KPMG Corporate Finance and Richard Spink at Burges Salmon.