The firm said in a statement that it had acquired four private finance initiative contracts from Dawn Construction Limited for an enterprise value of £4 million on behalf of its portfolio company Bellrock, a facilities management company.
The deal marks Lyceum’s 100th so-called buy-and-build acquisition – a strategy used by firms to merge companies in the same sector before selling the enlarged company at a later date – since it was formed in 2000.
The firm has completed more than four bolt-on deals for a majority of its portfolio companies since 2000, the statement said. This is higher than the market average, with private equity firms completing two add-on acquisitions per platform company over the course of ownership on average, according to analysis by Silverfleet Capital Partners in April.
Jeremy Hand, managing partner of Lyceum, said that he was “proud to have crossed this milestone”.
So called ‘buy and build’ strategies have increased in popularity with private equity firms over the past two years, as firms get creative to spend their cash amid a heated market where businesses are being sold for high prices. Firms including London-based Cinven have been busy with add-ons, completing a total of 40 add-on deals for the 17 portfolio companies in its 2013 fund, according to its website.
Add-on deals made up 40% of the 563 new acquisitions made by private equity firms in Europe in the first half of 2016, according to figures from Dealogic. Before the financial crisis, add-on deals typically made up around 25% of all European deals.
Lyceum is likely to return to the fundraising trail in 2017 as the firm’s third fund, a £255 million vehicle that closed in 2013, is now around two thirds invested, according to a person familiar with the matter.
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