Channel investor MXC Capital eyes four more deals

Redcentric, Castleton, 365 Agile and Pinnacle backer looking to add to stable after raising £12m in funding

Serial channel investment vehicle MXC Capital has announced it has conditionally raised £12m which it intends to use to "invest in a significant pipeline of identified opportunities".

The capital was raised through the placing of a total of 480,000,000 new shares, at a value of 2.5 pence per share.

The tech investment house, founded by channel entrepreneurs Ian Smith and Tony Weaver, has been busy of late, taking a 10 per cent stake in VAR Pinnacle Technology Group last month and buying Calyx Managed Services in February, before selling its parts off to Daisy, Chess and Redcentric and making £5.3m in profit in the process.

In total MXC Capital completed 13 transactions in the last six months, which included five "buy and build" acquisitions.

Now it appears the firm is going to continue its channel investing spree, as Peter Rigg, chairman of MXC Capital, said: "The placing, combined with our existing funds, provides the team with more than £27m to invest in a significant pipeline of identified opportunities."

Also announced yesterday, MXC Capital said it intends to acquire MXC Holdings - the privately held parent company of MXC Capital- which would "unify the MXC group organisation, management and investment interests into a single AIM quoted company".

Speaking to CRN, Marc Young, MXC Capital's chief executive, said: "Our initial target is to have eight to 10 investment vehicles, including the ones we have got. If you think across the group, once we acquire [MXC] Holdings, we will have Redcentric, Castleton Technology, 365 Agile and Pinnacle, and I think it would be fair to see another four platform deals done, over the next 18 months.

When asked if MXC Capital would be looking for long-term opportunities or short-term deals, such as with Calyx, Young said the investment vehicle is looking at a mixture.

"The focus is around the longer-term horizons, but we will always be opportunistic. By virtue of the strength of our industry reach and contacts, we will always look at turnaround opportunities, which might require us to be in there a long time.

"So when we first invested in Redstone that was a turnaround but we were in there five years later. Calyx was a slightly different opportunity, whereby we saw the best way of delivering the best result for that business was a break up, and if you are breaking a business up in that fashion, it's best done quickly."

In a statement released today, MXC Capital, said: "We are particularly focused on opportunities in managed services, government and the public sector, the Internet of Things, robotics, security, fintech and internet service providers."

MXC Capital also revealed its financial results today, which saw for the six months to 28 February the firm's losses before taxation were at £99,000, on revenues of £574,000.

Its bigger picture was much more positive however, with it recording trading EBITDA of £5.9m, from 1 November 2014 to 30 April 2015.