Doye waves goodbye to private equity headaches
Kelway founder lifts lid on deal with CDW that is aimed at propelling firm into £1bn league
Kelway chief Phil Doye (pictured) has spoken of his determination not to tie Kelway into another private equity deal as he looked to position his firm for future growth.
As announced earlier today, US giant CDW acquired a 35 per cent stake in Kelway, in a deal which signalled the buyout of existing PE backer Core Capital and the start of a concentrated growth phase for the London-based firm.
The two firms were linked initially through a trade agreement, but speculation had been mounting over their relationship for many months, after CRN exclusively revealed Kelway was looking to move away from Core and find another backer.
Speaking to CRN, Doye said: “We had a whole load of options – lots of PE interest and trade interest and felt that in the market we are in, you either have to be niche or you have to get real scale to be relevant to suppliers and customers on a global basis.
“The deal with CDW made obvious sense – we have been working with them for nearly two years. And have got to know them and been able to win mutual business in the UK, Europe and globally,” he said.
He added the excitement expressed from vendors since the deal was announced confirmed that the decision was the right one.
“We have also seen new opportunities emerge today alone that extends to millions of pounds of business for Kelway and CDW.”
He said the deal means he has increased his stake in Kelway, and crucially it has meant that Kelway now has three main shareholders: himself, CDW and Kelway’s managing director Dan Laws. A number of shares are also still held by other members of the senior management team.
Crucially, Doye explained that the deal was flexible in the sense that CDW has the right to extend its ownership of Kelway and acquire more shares.
“If this partnership proves successful then the next natural step would be for [the partnership] to be extended further and them to acquire more shares,” he said. “However there is no guarantee and there is optionality around it – if things don’t work out as planned, we could buy CDW out of the partnership too.
“We are going into this really excited about the opportunity to grow the business.”
As per a statement released by CDW, Doye said acquisitions could be one vehicle to growth if the right fit was found, but the support from banking giants Barclays and HSBC has put the firm in a strong position for organic growth through both firms’ existing customers.
“The fact that Barclays and HSBC have put together a finance package that has allowed us to do what we have done, and the fact that we have a two-bank club where money has been raised in this environment is a massive endorsement of our structure,” Doye added.
“We did not want PE investors in the business going forward, because of the way credit insurance firms view PE firms and worry about when they are going to move away. We are no longer a PE-backed leveraged business, we are a strong, privately-owned company with a strategic investor.”
However as a warning to rivals, Doye said the firm was fully focussed on growth.
“The senior team has been embroiled in this process for almost a year and the message I would give to competitors is that we are back and focussed. We have put this deal together to lay down the foundations for growth," he said.
“We clearly want to leverage our joint customers in a more meaningful way and take advantage of joint opportunities with vendors that have already expressed an interest in extending their footprint globally with us.”
Another important point was company culture, Doye stressed.
“Some may view CDW as a very large transactional business, but that is a bit of a mistake to view them like that – they are a very large and deep services and solutions provider. There is a deep cultural alignment between our companies.
“I would not have done this deal if I didn’t believe that CDW and Kelway had a shared cultural belief. We both have a hunger and a passion to grow our businesses.”