Close Brothers Private Equity (“CPBE”) today announces the sale of Network Disaster Recovery (“NDR”), the independent provider of disaster recovery and business continuity services, to Phoenix IT Group plc (“Phoenix”), the UK IT support services provider, for a cash consideration of £28.8 million. It is expected that on completion, NDR will have net borrowings of approximately £8.4 million. This transaction remains subject to the approval of Phoenix’s shareholders.

NDR is a leading provider of business continuity and disaster recovery services in the UK. Its customers comprise over 1,400 predominantly small and mid-tier enterprises across a range of sectors, together with a number of blue chip companies and local councils. In the year to April 2004, NDR generated sales of £12.9 million and EBITA of £3.5 million.

CBPE originally provided equity funding for the £25 million secondary buyout of NDR from 3i in December 2000 when it acquired a 35% equity stake in the business alongside management. Since 2002, there has been an increase in the size and growth of the business continuity market in the UK (source: Ovum Holway) and NDR has a consistent record of growth and a high level of cash generation.

During CBPE’s investment, NDR expanded the number of its fixed business recovery centres from two to four across the UK, now operating in London, Birmingham, Bristol and Uxbridge. The company expanded the number of its mobile recovery units from three to four, having pioneered this concept in the UK in 1983. In addition, NDR recently expanded its services to provide a data replication services which allows customers to recover efficiently and quickly from data corruption or system faults. The back-up data is either stored at NDR’s facility or on servers located at the customer’s premises.

Commenting on this transaction, Sean Dinnen, a partner at CBPE, said:

“NDR has been a successful investment for CBPE. The business continuity and disaster recovery market in the UK has been expanding in recent years as companies and organisations seek to improve their physical and digital security systems as a result of heightened security concerns.

“NDR has demonstrated its ability to successfully grow its business through expanding its customer base and its service offering enabling it to safeguard business systems for more than 1,400 organisations UK-wide.”

The sale represents CBPE’s seventh exit from Fund VI and follows the recent sale of a majority stake in Park Resorts, the caravan operator and Aroma & Fine Chemicals, the manufacturer of aroma ingredients for household products and agro-chemicals, to Octel Corp. On final completion of the NDR transaction, CBPE Fund VI will have realised a total of £188 million from seven full exits in the past 12 months. This represents a multiple of 3.5 times the original cost.

Advisors on this transaction were – to CBPE: PwC Corporate Finance (financial) and DLA Piper (legal).

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