Vision Capital Buys Tech Portfolio

Targets: ESI Inc., Kinectrics, Rail business and Waste Management Technology

Buyer: Vision Capital

Seller: AEA Technology

Purchase Price: $144.4 million (£76.4 million)

Advisor: Buyer: Lexicon Partners; Seller: The Parkmead Group

Legal Counsel: Buyer: Macfarlanes

Vision Capital has gone nuclear. The London-based secondary buyer has bought a portfolio of four companies from AEA Technology that marks its entrance into the nuclear consulting and the railroad consulting business. The deal, which is also the firm’s first corporate portfolio buy, has a price tag of $144.4 million (£76.4 million).

Vision Capital, which focuses on buying direct private equity portfolios on the secondary market, says that both nuclear and rail consultancy are industries offering significant growth. Vision CEO Julian Mash said that the deal shows his firm’s ability to buy assets from public companies as well as private companies.

The $144.4 million price tag is comprised of about $110 million (£58.3 million) for the value of the portfolio plus approximately $34.4 million (£18.1 million) of portfolio balance sheet liabilities.

The four companies being acquired are ESI Inc., a Pittsburgh-based nuclear power and energy consultant; Kinectrics, a Toronto-based nuclear power and energy management services provider; the Rail Businesses and Rail Companies, which is based throughout the U.K. and provides railroad management and maintenance services; and Winfrith, England-based WMT, a provider of radioactive waste consultancy services for nuclear power plants.

Oxfordshire, England-based AEA Technology became a publicly-traded company ten years ago. It spun out of the United Kingdom Atomic Energy Authority. This sale to Vision Capital completes a process of spinning out non-core businesses that AEA began last year. The company will now focus exclusively on its environmental business. It will use the $63.2 million (£33.3 million) in proceeds from the Vision sale to pay off bank debt and contribute to its pension fund. Last year AEA sold a portfolio of companies to Coller Capital for approximately $75.5 million (£40 million).

The purchase is the first deal from Vision Capital’s new fund, Vision Capital Partners VI, which closed earlier this year with a total of $1.3 billion in buying power. Vision Capital Partners VI, is comprised of a “core fund” of approximately $450 million (€350 million). This core fund is expandable up to $1.3 billion through parallel investments with limited partners that allow Vision to compete for a wide range of secondary buys. The new fund can move on buyout portfolios valued between $26 million and $643 million in equity. Previously, Vision raised funds on a deal-by-deal basis.

Last year, Vision agreed to buy a portfolio of seven companies from Legal & General Ventures (LGV) with a commitment of $155 million, which includes funding for follow-on commitments. In 2003 Vision acquired a portfolio of companies from Morgan Grenfell Equity Partners (MGEP), from which it has seen a flurry of exits. Vision’s MPEG portfolio buy was financed by Goldman Sachs. —M.S.