Initial investment: 10/01/2008
Fund: Buyout Fund I
- Strengthened the management team through the appointment of an experienced non-executive chairman with extensive telecoms experience.
- Annualised operational savings of circa £1.6m were generated through switching XLN’s line usage supplier which was achieved through the introduction of one of Palatine’s network contacts.
- Undertook a market-mapping exercise to identify potential acquisition opportunities.
- Supported management with the acquisition and integration of OneBill Telecom which created one of the UK’s largest independent telecoms providers, adding 24,000 business customers, generating an additional £4m of EBITDA. Palatine provided an additional equity to part fund the acquisition.
- Supported the development of new products and services to the existing customer base, increasing their dependence on the service and reducing the likelihood of customers switching provider.
- XLN’s profitability grew from circa £3.5m at the time of the management buyout to circa £12m at exit.
- Successfully exited the business via a secondary management buyout backed by ECI generating a 4.5x return
The XLN team had created one of the UK’s largest independent telecoms providers for SMEs and were looking to further expand the company through organic growth and acquisition. Deregulation of the retail telecoms market also meant XLN could leverage buying power and offer businesses cost savings and better customer service.
Our investment strategy had four key elements: to increase organic growth, deliver operational improvements, develop new products and acquire competitor businesses in a fragmented market to drive synergistic benefits from utilising XLN’s scalable operating platform.
XLN has been able to take advantage of a highly fragmented sector and position itself as a market leader in the SME telecoms space. Under the leadership of CEO Christian Nellemann, XLN has experienced exceptional growth over the past two years and I wish the business all the best for the future in its partnership with ECI.