Electra sells credit business

Electra Partners Europe has sold Premium Credit, a UK finance company, to MBNA Europe for £67m, achieving an IRR of 29 percent.

Electra Partners Europe, the European mid-market buyout firm, has announced a 29 percent IRR on its investment in Premium Credit, a UK-based provider of instalment credit for the financing of commercial and consumer insurance premiums.

Electra backed the buyout of Vendcrown, the holding company of Premium Credit, from HSBC Gibbs Holdings in August 1996. London-headquartered HSBC retained a 19 per cent stake in the business at the time of the 1996 buyout.


Net proceeds attributable to Electra for the deal are £66.6 million ($121 million; €96 million) in cash (making total aggregate proceeds of £72.4 million inclusive of the loan stock repayment of £5.8 million in October 2003). This compares with Electra’s £57 million valuation of its interests in Vendcrown at that date.


It is the second announcement of a private equity exit involving Electra in one day. The firm also has also benefited, by way of a partial exit, from the sale of Baxi to BC Partners, which was also confirmed today.


In a bullish annual statement last month, Electra chairman Hugh Mumford said he felt the prospects for realising a number of portfolio companies over the next 12 months had improved. He also said he anticipated a “significant improvement” in Electra’s financial position by 30 September 2004 if business confidence continued to grow and realisations were concluded at projected values.


Over the four and a half year period to 30 September 2003 Electra realised investments valued at over £1.3 billion from its portfolio.


Electra Partners reported that it had a total of £1.5 billion of funds under management at 30 September 2003 and that it had invested over £625 million in the five years to that date.


Earlier this month, Electra backed a E205m management buyout at Aliplast, the European conservatory and window systems supplier based in Belgium.