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HgCapital today announces the successful pricing of the initial public offering (IPO) of Manx Telecom plc, a leading UK telecommunications operator based on the Isle of Man. The Admission Document in respect of Manx Telecom’s listing on London’s Alternative Investment Market (AIM) will be published later today and completion of the listing is expected to occur on 10 February 2014. Manx Telecom’s shares will be sold at a price of 142 pence per share as part of the IPO, which is fully underwritten, representing a market capitalisation of c. £160 million.

HgCapital has agreed to sell its entire shareholding in Manx Telecom as part of this process. This realisation represents an overall investment multiple of 2.1 times original cost and a gross IRR of 26% for HgCapital clients.

Manx Telecom will continue to be led by its current management team. Employing more than 280 people, Manx Telecom offers a wide range of fixed line, broadband, mobile and data services to consumers and businesses on the Isle of Man. The business has a track record of innovation and was the first company in Europe to launch a live 3G service. Manx Telecom continues to support the Isle of Man Government’s e-business strategy of developing a world-class telecommunications infrastructure to attract future investment to the island.  As part of this commitment the business will be rolling out 4G mobile services in 2014.

HgCapital, along with CPS Partners and management, acquired Manx Telecom from Telefonica in the summer of 2010. In their three and a half year ownership of Manx Telecom there has been a significant transformation of the business.   After initially building an experienced management team, subsequent initiatives led by HgCapital, working closely with CPS Partners, have included driving accelerated revenue growth through a focus on offering high quality, attractively priced packages to customers, alongside a clear emphasis on improving cost control processes within the business.  These changes have helped to deliver improving profit growth, in-line with HgCapital’s original investment hypothesis.  Manx Telecom has also remained highly cash generative throughout HgCapital’s ownership, facilitating a recapitalisation of the business in March 2013.  The business has delivered strong growth under HgCapital’s ownership and for the six-month period ended 30 June 2013, Manx Telecom grew revenue by 4.5% on H1 2012, generating operating profit growth of 8.2%.

Manx Telecom represents the fifth realisation from the 2009 vintage HgCapital 6 Fund; and is the fourth exit by the same Fund over the last 12 months.  Following this realisation, HgCapital 6 will have returned c. 45% of all invested capital back to clients.  In aggregate, the Fund’s five realisations to date have delivered an overall investment multiple of 2.6x original cost whilst generating a gross IRR of 40%.

Nic Humphries, Managing Partner of HgCapital and Head of TMT, said:

“We are delighted to have helped facilitate Manx Telecom’s transition to the public market.  We believe Manx is well suited to thrive as a public company, especially after the changes we have made to drive performance and improve efficiency, as well as capitalise on the growth opportunities available to it in particular in the provision of high end data centres.  We wish the Manx management team every success as the company enters the next phase of its development.”

Edward Wielechowski, Associate Director in HgCapital’s TMT team added:

“We are very pleased with the strong performance of Manx Telecom during its partnership with HgCapital. The business has delivered against our investment thesis; continuing investment in the high quality, cash generative on-island businesses, whilst supporting acceleration in the data centre and off-island businesses. The management team built up over the last few years has been crucial for delivery of this strong performance and the business is well placed for the next phase of its growth; we wish them well in this.”

Simon Cunningham, Partner at CPS Partners, said:

“We are delighted with the way that Manx Telecom has developed and grown its business over the past three and half years. We feel pleased to have worked closely with HgCapital and wish management every success in the future.”

HgCapital was advised on the sale by the corporate finance team at Liberum Capital Limited, with legal advice provided by Linklaters LLP.

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