Geo Acquired by Alchemy in £62m Deal.
Geo has been acquired by the Alchemy Investment Plan (“Alchemy”) from the Hutchison Whampoa Group at an important stage in its evolution.
Geo, a provider of optical fibre networks, has achieved a win-win deal with its acquisition by Alchemy.
Alchemy has paid £62m to buy the company from the Hutchison Whampoa Group. Managing Partner of Alchemy’s London adviser Jon Moulton has said he was attracted to Geo by its innovative business model, high quality bespoke services and excellent track record.
“It is in a unique position in a sector full of ‘me too’ operators,” he said. Alchemy, one of the UK’s most successful private equity investors, believes a key Geo strength is its focus on the fastest growing and most valuable part of the telecommunications market – the provision of data services.
In addition, Moulton values Geo’s focus on its target customers – the largest organisations in the UK – and believes that the company’s bespoke solutions, based on dedicated optical fibre, are the most appropriate way of addressing this demanding market.
“Geo owns the highest quality, diverse optical fibre networks in the UK and has an excellent reputation for winning and delivering complex projects,” he said. “In addition, it is profitable after just three years of operations and has a highly capable management team and workforce.”
“The things that attracted Alchemy to Geo was its strong asset base, in particular its high quality fibre-rich network which is well future-proofed,” said senior executive Eric Lakin, who worked on the deal. ”We are at the early stages of a period of high growth demand for dedicated fibre connectivity.”
Lakin commended Geo’s ‘high quality management team’: “In only a few years, this team has grown from having one customer to become a strong and stable business, executing its strategy well and looking at new revenue streams. You only need to look at new projects like FibreSpeed to see where it’s heading. The Alchemy acquisition is good news for all stakeholders – customers, suppliers, shareholders and employees.”
Chris Smedley, Geo’s Chief Executive, says the deal is indeed a positive one in every respect for Geo and its customers and partners. “We have replaced one experienced and well-funded investor with another,” he says. “There are no adverse consequences for the company, its customers or key partners as a result of this transaction. In Alchemy we’ve found an investor that believes in our strategy and wants to back our ongoing rapid growth. There will be no merger of operations, no redundancies, and no change of personnel that might affect customers.”
“Alchemy is the best possible buyer for us,” said Smedley. “It fully understands and believes in what makes us unique, and has a track record of taking new ideas to market. This is the most positive affirmation of our business model we’ve ever had from one of the industry’s most experienced investors.”
Smedley says he is delighted with ‘a nice, simple deal’ with the buyer taking a 100% stake in Geo, including cash balances, with no change to existing plans or structures: “There’s been no need either for the buyer to raise a whole lot of debt,” he said.
“Alchemy will be an active investor, and we look forward to working together and benefiting from its reputation for adding value to what it buys,” he added. “Alchemy is a specialist in companies at exactly our stage of evolution.” Smedley pointed out that Geo is no longer a start up business, but is now well into its next evolutionary phase, delivering services to some of the UK’s most demanding users: “We have well developed relationships with customers like Carphone Warehouse, Tiscali, 3UK, and have signed a number of new customers in new markets for us, like financial services,” he says. “We look forward to penetrating more new sectors.”
Regent Partners LLP acted as exclusive Corporate Finance advisor to Hutchison Whampoa, the parent company of Geo.