Phoenix in £62m toy deal

Phoenix Equity Partners has led the £62m secondary buyout of Vivid Imaginations, maker of Spiderman and Simpsons toys, from Jordan Group.

A management team backed by Phoenix Equity Partners, the UK middle market buyout house, has acquired toy maker Vivid Imaginations from the New York-based private equity firm Jordan Group in a transaction valuing the company at £62m.

As part of the deal, Phoenix Equity will be providing £20m in equity to acquire a 65 per cent stake in the firm, with management holding 35 per cent at around £2m. Debt funding is being provided by Royal Bank of Scotland in the form of a revolving term loan credit and working capital facility totalling approximately £40m.

Founded in 1992 by Nick Austin and Alan Bennie, former senior managers at Matchbox UK, Vivid, whose toy character brands include Spider-Man and the Simpsons, has a 5 per cent share of the UK toy market. The firm had sales of £85m in 2002, up from £9.8m in the first year of operation.

Jordan Group, which is an affiliate of the Jordan Company, made the decision to exit the business late autumn 2002. Hugh Lenon, managing partner of Phoenix, said the firm first became aware of the deal when it was approached by KPMG in September last year. KPMG are acting as corporate finance advisers to Vivid.

Commenting on Phoenix’s plans for the business going forward, Lenon did not rule out the possibility for Vivid to grow by acquisition: “The plan is to build the business up via investment in new toy categories and intensified new product development categories. Despite the fragmented nature of the UK toy industry, we have no plans for add-on acquisitions as such – although you never know.”

Vivid is Phoenix’s latest investment from its £300m Phoenix Equity Partners IV fund, of which the firm has already invested £80m in five transactions. Going forward it hopes to invest £30m in four companies a year.

Phoenix, which was bought out by management from Credit Suisse Group in March 2001, focuses on opportunities across media, financial services, leisure, business services, consumer and transport.

Recent deals include the acquisition of Abbey Hospitals Group, the foundation of Equinox Luxury and the subsequent investment in Jimmy Choo, the shore designer.