The management team of Metronet (UK), the fast-growing hybrid wireless and fibre Internet service provider, has led a management buyout of the business backed by LDC, the leading mid-market private equity firm, providing an exit for existing investors YFM Equity Partners and Acceleris.

Based at Manchester Science Park, Metronet (UK) provides business critical data infrastructure to over 500 UK companies, from SMEs to large corporates such as Laing O’Rourke and Grant Thornton. Its services include high speed connectivity such as wireless and fibre leased lines and metropolitan Ethernet networks, managed services, such as voice over internet protocol (VoIP), co-location and managed hosting, and wireless leased data services to support CCTV installations, where customers include Greater Manchester Police Authority.

It was founded in 2003 by James McCall, Operations Director, Roy Davies, Finance Director, Bill Riordan, Business Development Director, and former Chairman, David Ashmore, with the backing of angel investor group Acceleris and private equity investors YFM Equity Partners via the North West Business Investment Scheme (an ERDF 2000-06 funded Venture Capital Loan Fund project).

Since then, using a combination of traditional optical fibre and best of breed high speed wireless technology, the business has built one of the most powerful and reliable IP networks in the UK. This unique hybrid approach allows for rapid installation times, competitive pricing, and the vital ability to deliver a service level agreement without dependency on the incumbent operators. Metronet provides services across the whole of the UK. Its enhanced wireless capability is currently available in areas including Manchester, Liverpool, Leeds, Birmingham, Crewe, and Macclesfield.

As part of the deal, LDC is investing £11m of equity funding for a majority equity stake, enabling the business’ existing backers to exit and providing additional capital for expansion. The full management team led by CEO Elliott Mueller will remain in position.

With the backing of LDC, Metronet (UK) now plans to accelerate growth by expanding the capabilities and reach of its hybrid network across the UK, expanding its sales and marketing function and further investing in its infrastructure and services.

Elliott Mueller, CEO of Metronet (UK), said: “This is an important step in our development. Acceleris and YFM Equity Partners have supported the business from a start-up to becoming the largest hybrid Internet service provider to businesses in the UK. This has provided a strong platform for further expansion at a time when business’ requirements and demand for service quality continue to increase, driven by the acceleration of cloud computing and increasingly data-dependent business models and operations.

“In LDC, we now have a single institutional investment partner who has the confidence and expertise to take the business forward with us. Their backing is testament to the strength of the company we’ve built over the last nine years – the quality of our team and our service. It is also excellent news for our customers who will benefit from increased investment in the business, enabling us to continue to meet their increasing requirements.”

Metronet has the ideal growth characteristics – a capable and ambitious management team and a clearly differentiated model

Investment Directors Jonathan Bell and Simon Braham led the deal for LDC’s Manchester Office.
Jonathan Bell said: “Metronet (UK) has the ideal growth characteristics – a capable and ambitious management team, a clearly differentiated model, the best customer service in the industry and strong market dynamics. With a more streamlined and focused investor base, it has the opportunity to achieve its goal of becoming the UK’s market leading provider of independent, managed wide area networking services to business.”

Commenting on the exit, Angela Warner, Portfolio Director at YFM Equity Partners, said: “YFM Equity Partners has provided several rounds of development capital funding since we invested in the company in 2004 to support the expansion of operations to Birmingham, Leeds and Liverpool. The company still has significant opportunities for further growth and we wish the management team continued success.”

Altium advised LDC and Newco, led by Managing Director Stuart Lees and supported by Phil Frame and Elin Sion. Stuart Lees commented: “Metronet (UK) operates in a dynamic market with significant growth prospects and, as a local business with great potential, it is a fantastic investment opportunity for LDC. The team bring with them the capital, experience and expertise to support Metronet (UK)’s development that will take the business through its next stage of growth.”

Carl Houghton, Partner and head of Clearwater’s TMT team, advised shareholders of Metronet (UK) on the transaction and was supported by Assistant Director Andy Strickland. Carl Houghton said: “Metronet (UK)'s hybrid fibre and wireless solutions are set apart by the company's self sufficiency – by not having to touch BT’s network it can and does provide service levels to businesses that BT resellers cannot match. The LDC investment has enabled a successful exit for early stage funders YFM Equity Partners and Acceleris, plus it will also provide essential financial and strategic support to the existing management team and enable it to fast track key developments such as VOIP and other services across Metronet (UK)’s own network.”

Gateley (Paul Jefferson and Jemma Bolton) provided legal advice to LDC and Newco, while Eversheds (Alasdair Outhwaite and Ed Bartlett) advised Metronet (UK)’s shareholders and the on-going management team.

The deal is LDC’s fourth involving North West businesses in 2012, following investments in Airline Services Limited, corporate travel management company TD Travel and Bifold Group, the leading manufacturer of switching instrument valves and pumps for the oil and gas industry.

Issued on behalf of LDC by Citypress.