A listed investor has sold then reinvested into transport software business Velociti.
Literacy Capital plc’s stake in Bromsgrove-based Velociti stands at £51m following the deal, which will see CBPE also invest.
Velocity, which is a software provider to the bus and rail sectors in the UK and internationally, is Literacy Capital’s second-largest holding.
The transaction includes a total return of 14.8x MoM for Literacy Capital’s shareholders, it said, with a ‘significant proportion of proceeds’ being re-invested alongside CBPE.
Velociti remains a top-three shareholder in the firm by value. Cash proceeds from the deal will predominantly be used to repay a revolving credit facility held by Literacy Capital, while it intends to return no less than £6m of capital to shareholders before the year end.
Literacy originally acquired EPM Solutions in February 2020, with a further three small acquisitions completed before the business was rebranded as Velociti last year.
The transaction sees the first investment from CBPE’s £714m fund, raised earlier this year.
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“Velociti has been an extremely successful investment for Literacy Capital and has generated a significant premium to carrying value, so we are really pleased to announce this transaction today,” said Richard Pindar, CEO of Literacy Capital’s investment manager.
“The leadership team, led by Jeff Hewitt and Carly Wilson, deserve considerable credit for the significant progress Velociti has made and the exceptionally strong performance of the business since they joined.
“The journey with Velociti over the past five and a half years actively demonstrates how Literacy Capital supports businesses to add significant value. With a degree of patience, [our] shareholders have benefited from very strong returns as a collection of small, founder-owned businesses have been developed into an enlarged software group with excellent management, making it highly sought after by larger private equity investors. Once again, a significant premium to previously reported carrying value has been achieved on a sale to private equity.
“We look forward to remaining on this journey, with the Velociti team and CBPE, and continuing to provide our support during the next few years.”
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