Birmingham-headquartered business finance company Frontier Development Capital has launched following its first investment into a national digital agency. The deal has enabled national digital agency group Ingenuity Digital Holdings Limited (IDHL) to complete a management buyout (MBO) of the business. HSBC provided funding to facilitate the deal in partnership with FDC.
Frontier Development Capital (FDC), sister company of Finance Birmingham Ltd, which is based in Baskerville House in Birmingham city centre, is a new financier focused on supporting regional business growth across the UK. The support for IDHL is the first investment from its newly launched National Mezzanine Fund which is open to businesses across the UK that require flexible finance packages to achieve their growth aspirations. In addition to its first investment, Frontier Development has also opened an office in Manchester to accelerate its dealmaking activities across the North of England.
The investments from HSBC and FDC follow a period of consistent growth for IDHL and a record financial performance in 2016, with revenues exceeding £10.5 million. The MBO, which values the business at £30 million, has provided an excellent return for exiting investors and enables the senior management team to become majority shareholders.
Founded in 2000, IDHL’s 17-year track record has seen it become one of the UK’s largest full-service digital agencies and the largest independent in the North, home to the Ingenuity Digital, WMG and NetConstruct brands. The business’ 120 strong team of experts deliver a range of digital services to clients including TNT, Coast and Radley, and have achieved numerous prestigious awards.
Ondrej Okeke, Regional Investment Director at Frontier Development Capital (FDC), said:
“This company is a perfect example of the type of business we are focused on supporting – a regional business with ambitious growth plans and a very credible management team.
“IDHL’s success to date has been based on its highly client-focused approach, underpinned by robust proprietary systems – with such a strong base and energy, we are looking forward to working with the team and seeing just how much they grow the business in the coming years. From the Midlands to the North and the South East, Frontier Development Capital hopes to galvanise regional businesses. We encourage any business looking to pursue growth plans to come and talk to us.”
Dennis Engel, Chief Executive of IDHL, said:
“This investment will help continue our ambitious growth drive and support our clients with innovative new products and services. It has been a transformative 12 months for IDHL with management appointments, new headquarters and a strengthening of our expert team. The MBO will help us keep up this momentum into the future. I’m delighted for the exiting investors and the employees who’ve benefitted from their share options and I’m also pleased about the increased control and shareholding within the business.”
Adam Kelly, HSBC’s Area Director for North Yorkshire & Humber, said:
“We are delighted to be supporting IDHL and its new owners, as it begins a new chapter in its history. The management team has an ambitious strategy to target new markets across the UK and increase its offering to customers. We look forward to seeing the business and its new management team continue to flourish.”
Andy Miller from Leeds-based Sentio Partners provided corporate finance services in relation to the transaction with Jonathan Jones and Andrew Fordham from Squire Patton Boggs providing legal advice to the company and management team. PwC provided financial due diligence and tax advice. Legal firms Eversheds Sutherland and Addleshaw Goddard advised HSBC and FDC respectively.