ECI Partners has invested in XLN Telecom (“XLN”) alongside management, acquiring a majority stake from Zeus Private Equity.
XLN is the UK’s leading provider of telecoms services for small businesses, with over 115,000 customers. Founded in 2002, XLN specialises in providing small businesses in the UK with high-quality, low-cost fixed-line, mobile and internet services via its own industry leading proprietary technology platform. In the last three years, XLN’s revenues have grown substantially from £27 million in 2006/07 to over £54 million in 2009/10.
ECI, which has a successful track record of backing growth companies, will continue to support Christian Nellemann (founder and group CEO) and his award winning management team, to grow XLN both organically and through acquisition. The market remains highly fragmented and as a result of this transaction the company will have funds available to more than double the size of the business through acquisitions.
Tom Wrenn, who led the deal for ECI, commented: “XLN is a superb growth business in a sector that has performed strongly during the recent downturn. It is led by a high-quality management team that has a clear vision for the future. XLN has considerable scope to add more products and services and is in an excellent position to act as a platform for consolidation in the fragmented telecoms market. We are delighted to be backing this excellent team and to provide additional capital to continue to grow the business.”
Christian Nellemann, CEO of XLN Telecom, added: “By taking a completely fresh approach, we have been able to transform a niche and historically overlooked sector of the market. We have been able to achieve this by combining best quality products with best value pricing and industry leading customer service standards. As a result, we now have a highly profitable and scalable business that will allow us to rapidly expand the range of services we deliver to the small business market. We are delighted that ECI will be a key part of the business’s exciting next chapter given the opportunities for consolidation within our sector.”
Jeremy Perl, Director at Lloyds, who provided the senior debt for the acquisition alongside Clydesdale and RBS, commented: “The key competitive advantage of XLN is its proprietary, automated technology platform, which enables it to offer attractive prices and excellent customer service. This, when combined with its established routes to market, means the company is continually gaining market share, with scope to further increase its penetration. The transaction represented an excellent opportunity for us to support the first deal out of ECI Partners’ latest £437 million fund and demonstrates our commitment to funding growing, forward looking, technology-based businesses.”
