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05-09-2017 - Modwenna Rees-Mogg - 0 comments
Deal Envy - Altitude Partners makes 2.7x return on Gradwell Communications

With August having been a quiet month here at AngelNews we looked back to July to find a nice story about a successful exit.  Altitude's sale of Gradwell Communications fits the bill.

Altitude Partners is rapidly becoming a fund manager to watch amongst private investors. This deal has some interesting characteristics which are worth noting - not least that it was sold to a management buy-in team with private equity backing. The deal reinforces Altitude's strategy of doubling investors’ money in a relatively short period of time following the first exit from their first fund which achieved a 2.9x return for the private investors backing the fund. 

Gradwell has been a pioneer of Voice over Internet Protocol ("VoIP") telephony in the UK. The business has diversified substantially since Altitude’s investment, providing a wide range of cloud-based services and connectivity to smaller SMEs.

Altitude originally invested £1.1m in 2012 to support the growth of the business and over the course of the investment period EBITDA has doubled with turnover rising to £7.4m over the same period.  Jonathan Simm, Partner at Altitude commented: “This second very successful exit is comfortably in-excess of our stated investor target IRR when we raised our first fund. The fund is performing well and we continue to search out good quality trading businesses to invest in, throughout Southern England.

The Altitude team which was formerly at LDC seem to have carved a niche in the market - small cap opportunities which display the performance characteristics of the larger companies fund managers like LDC back.  Its average "Patient Capital" horizon may end up being considerably shorter than for many in the industry.  Deals are also structured to be BPR acceptable.

Altitude has just raised its second fund and as always in VC time will tell, but the runes read well as of now.

 

For angels, it would be worth befriending Altitude not just for the funds they have available to follow on, but also to learn a bit more about the how and why they invest the way they do. They are not a "me too" angel type deal fund manager and there is value in their different perspective. 

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