Racal Acoustics



Investment Date:August 2005Exit Date:December 2008
Investment Type:Secondary buyout from JF LehmanExit Type:Trade
Sector:Defence ManufacturingEnterprise Value:£115m

 

 

Business Description
  • Racal Acoustics is the leading global designer and manufacturer of ruggedised personal communications equipment (i.e. headsets) for the defence and avionics sector. Its products are used by 100 military branches in 80 countries around the world
  • The product range is centred around Active Noise Reduction (ANR) technology. This uses “anti-noise” to cancel out or reduce noise levels experienced by headset users in very high ambient noise environments e.g. inside tanks or armoured personnel carriers
Investment Rationale
  • Racal had a market leading position in a growing and predictable market where long term defence contracts offered forward visibility of earnings
  • The number two operator was weak in comparison and ECI saw potential for further growth through the ‘soldier modernisation programmes’
  • Racal had a strong existing management team with ambition

Strategy/Value Creation
  • Management team was strengthened including the introduction of an experienced industry chairman at investment
  • Developed new markets particularly with US military customers. In 2004, Racal Acoustics generated c£1m of revenues from US military customers. By 2008, this is estimated to have increased to more than £20m
  • Product development generated strong orders for both the Raptor headset and a new in ear product, Frontier 1000
  • Significant reduction in lead times and service improvements welcomed by Racal’s customers
  • Active engagement with strategic trade buyers throughout the investment period
Performance
  • Racal Acoustics revenues grew at a CAGR of circa 20% p.a. over the 3.5 years of ECI’s investment
  • Sold to a US trade buyer for £115m representing a return of 4.7x cost and a 67% IRR

 


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quote ECI invested where they needed to and gave us the support we needed to grow"

Geof Eeles, CEO Racal Acoustics

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