Lyceum Capital closes in on second channel acquisition of 2016

Private equity firm has its sights set on takeover of firm in 'similar space' following Sabio deal

Private equity firm Lyceum Capital is expecting to make another acquisition "in a similar space" to Sabio, following its deal with the comms VAR earlier this month.

Lyceum Capital acquired a 56 per cent stake in Sabio for £28m to add to a portfolio that already included security software firm Clearswift and infrastructure MSP Adapt.

"We are constantly looking," Simon Hitchcock, partner at Lyceum Capital told CRN. "We're a firm that typically does three deals a year.

"We've closed Sabio and we'd hope to get another two closed by the end of the year and I'd expect one of those to be in a similar sort of space to this.

"We've got several very detailed advanced conversations but it's too early to call [at the moment]."

Incoming Sabio CEO Andy Roberts claimed that Lyceum Capital stood out from other private equity firms because of the long-term view it took to Sabio's growth.

"I think there is a certain amount of stigma attached [to private equity], but my approach both during the process [of the acquisition] and since has been that they're very much a partner of ours.

"Being a very small boutique private house, and taking a very long-term view in growing our business, they felt like a very natural fit.

"If you look at their portfolio they very much take a partnership approach and look to accelerate the growth of organisations."

Elsewhere in the telecoms arena, Polycom snubbed a $1.96bn takeover from Mitel, in favour of a $2bn bid from private equity firm Siris Capital.

Hitchcock believes that the UK IT sector is warming to the idea of private equity as a legitimate option for raising finance, particularly because it frees up money for shareholders - something that doesn't happen if two companies merge.

"I think owners and managers are more open-minded to what it could do," he added. "They've seen some of the success stories - Six Degrees [for example] - the classic private equity stories that have gone very well and made lots of people lots of money and built scale businesses from smaller parts.

"People have now seen private equity working through its full cycle in this market, with a positive outcome, which has made them more open-minded."