TIDMDUKE
RNS Number : 0557G
Duke Royalty Limited
22 July 2021
22 July 2021
Duke Royalty Limited
("Duke Royalty" or "Duke")
New Royalty Agreement with IT Service Business
Duke Royalty, a provider of alternative capital solutions to a
diversified range of profitable and long-established businesses in
Europe and abroad, is pleased to announce that it has further
diversified its revenue base by entering into a GBP7.7 million
royalty financing agreement (the "Financing") with InTec Business
Solutions Limited ("InTec"). InTec is a UK company specialising in
the design, implementation, and support of a wide range of cloud
services and business applications including I.T. managed services,
I.T. infrastructure support, hosted collaboration, and
communication solutions.
Highlights:
-- Initial cash yield of 13.5% per annum via monthly payments, which commence immediately.
-- 30-year secured financing, with distributions to be adjusted
annually to reflect InTec's consolidated revenue growth, on typical
Duke terms.
-- InTec's underlying businesses have a history of predictable
revenue from longstanding operations, while InTec has consistently
grown revenue and profitability over the last five years
-- Since being founded in 2016, the InTec team have already
completed seven acquisitions and with a pipeline of further
acquisitions, Duke expects to provide further financing over the
next 18 months
-- Duke's investment will facilitate a refinancing of the
capital structure in InTec, consolidating equity shareholding among
the founding management team and introducing Duke as the senior
lender to support the business's ongoing M&A strategy.
Neil Johnson, CEO of Duke Royalty, said:
"Duke Royalty is building and diversifying its cash revenue by
entering into new partnerships, and we are delighted to add InTec
along with Fairmed very recently. InTec has all the qualities of an
attractive royalty partner for Duke - a buy & build platform
with a track record of growth and profitability with management
aligned through significant equity holdings to continue growing the
business.
"The underlying businesses' predictable revenue profiles
underpin our confidence in the business model. Furthermore, we
believe that the market dynamics support InTec's long term
prospects, in particular the urgent need for businesses to
implement effective IT solutions which support complex hybrid
working models and the increased uptake of new technologies among
SME clients. Our support of this investment reflects our strong
belief in the management team's ability to continue the success
achieved to date and the attractiveness of an M&A strategy in
this sector."
Simon Howitt, Chairman of InTec, said:
"Duke's investment solution and the team's appetite for
supporting transformational strategies is key to our vision for
what we want InTec to become. By taking on Duke's capital, we have
simplified our balance sheet and set a firm foundation for future
growth, both via M&A and organically. We are excited to
continue to execute on our clearly defined plan."
Further information regarding InTec
Formed in 2016, InTec is highly acquisitive and has acquired
seven businesses to date. InTec's underlying businesses have long
standing operations, high customer retention and positive EBITDA.
Future growth plans include M&A of businesses with similar
financial characteristics but diversification of specialties and
local geographies which are accretive to current operations.
InTec comprises a UK-wide group of ICT specialists enabling
businesses to work smarter through technology. It specialises in
the design, implementation, and support of a wide range of cloud
services and business applications including I.T. managed services,
I.T. infrastructure support, hosted collaboration, and
communication solutions. InTec is an end-to-end independent
technology consultancy helping businesses understand and see real
value from their technology systems and investments.
About the Financing
Duke has committed GBP7.7 million of capital to enable InTec's
current management team to refinance certain balance sheet items
and continue their acquisition strategy of IT managed service
businesses. Future tranches of capital are planned at Duke's sole
discretion, as InTec believes it can replicate the strategy of
acquiring businesses accretive to current financial results, which
would also be enhancing Duke's position as senior secured
lender.
The terms of the Financing are in line with Duke's typical
investment criteria. The Financing is provided through a
combination of a secured loan and preference shares and Duke will
be entitled to monthly distributions (the "Distribution") beginning
in July 2021.
In line with Duke's other investments, and reflective of the
participating nature of Duke's business model, the Distribution
will be adjusted annually based on the percentage change in total
combined gross revenues of the Group for the 12 months to 31
December 2021, compared to the prior financial (calendar) year. The
first adjustment will occur from July 2022. The annual adjustment
in the Distribution will be subject to an agreed collar.
The Financing is for a period of 30 years, with the Distribution
payable to Duke throughout the duration of this term, unless InTec
utilises an early buyback option which will trigger an early
redemption payment to Duke.
Duke Royalty Portfolio
A full list of Duke's current Royalty Partners are now included
for reference on our Partners page of our website:
www.dukeroyalty.com/partners
This announcement contains inside information.
***ENDS***
For further information, please visit www.dukeroyalty.com or contact:
Neil Johnson / Charlie
Cannon Brookes / Hugo
Duke Royalty Limited Evans +44 (0) 1481 730 613
Cenkos Securities
plc Stephen Keys / Callum
(Nominated Adviser Davidson / Julian Morse
and Joint Broker) / Michael Johnson +44 (0) 207 397 8900
Canaccord Genuity Adam James / Georgina
(Joint Broker) McCooke +44 (0) 207 523 8000
SEC Newgate (PR) Elisabeth Cowell/ Richard + +44 (0) 20 3757 6880
Bicknell/ Megan Kovach dukeroyalty@secnewgate.co.uk
About Duke Royalty
Duke Royalty Limited provides alternative capital solutions to a
diversified range of profitable and long-established businesses in
Europe and abroad. Duke Royalty's experienced team provide
financing solutions to private companies that are in need of
capital but whose owners wish to maintain equity control of their
business. Duke Royalty's royalty investments are intended to
provide robust, stable, long term returns to its shareholders. Duke
Royalty is listed on the AIM market under the ticker DUKE and is
headquartered in Guernsey.
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END
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