Gresham backs Management Buy-Out to create James Grant Group Limited

Gresham Private Equity, the UK mid market private equity specialist, today announces that it has exchanged contracts on the £20.75m management buy-out of five of Formation Group PLC’s (“Formation”) nine businesses to create James Grant Group Limited (“JGG or “the Group”). These businesses are leading providers of management and professional services to the sports, music and entertainment sectors.

The five businesses included in the transaction are; James Grant Media Ltd, O J Kilkenny & Co Ltd, Proactive Sports Management USA Inc, Formation Sports Capital Ltd and Proactive Sports Management Ltd. These businesses have an impressive collective roster of over 750 clients including Ant & Dec, Bryan Adams, Lily Allen, Sir Bob Geldof, Vernon Kay, Piers Morgan, Oasis, John O’Shea, Lesley Vainikolo and Holly Willoughby. Phillip Schofield is a client and shareholder. The Sports Capital business deals with many UK Premier League football clubs as well as other high profile clubs across Europe.

The completion of the deal is subject to shareholder approval. Formation has convened an EGM for 24 August 2009.

Upon completion, these five businesses will form JGG and will be led by Neil Rodford as Chief Executive. JGG will trade with two divisions; Management Services which will consist of the Group’s media and sports management businesses and Professional Services which will consist of the Group’s accountancy practice and sports finance business. The Management division will adopt James Grant as its trading name, with Professional services trading under the name of O J K.

Both divisions will continue to serve the interests of some of the UK’s leading sport, music and entertainment talent. During the last full financial year (ending 31 August 2008), the five businesses under the PLC generated combined revenue of approximately £10 million. The majority of these businesses enjoy market leading positions in their respective fields.

Gresham and the 10 strong JGG Management team intend to deploy a growth strategy focused on three keys areas; selective acquisition, organic development and developing the range of services the Group provides. This strategy will enhance the Group’s scale and reach within its chosen sectors. Management are very highly regarded within their fields and bring with them extensive experience. All the management team will be investing in the new company, demonstrating their commitment to the next stage of the businesses’ development.

Andy Marsh, Partner Gresham commented; “We have known Neil and the team for a long time and recognise that they are a first class management team of some market leading businesses. We believe the partnership between Gresham and James Grant Group Ltd will result in the accelerated growth of the business through acquisition and further investment in new organic initiatives.”

Neil Rodford, CEO of the newly formed, James Grant Group Ltd commented; “We are delighted to have found a partner of Gresham’s magnitude to enable us to complete this MBO. We have an excellent management team in place and with Gresham’s support we can substantially grow the business and the services we can offer our extensive and complementary client base. We look forward to working closely with Gresham to identify the right acquisitions and to accelerating our growth through organic initiatives”.

Gresham will provide 100% of the funding to complete the transaction using its recently launched debt underwriting product. Its ability to do this has significantly reduced the transaction risk for Formation Group PLC.

John Lawrence, Chairman of Formation, commented: “Gresham’s independent status and commitment to underwriting the entire transaction which improved the deliverability was a great positive for Formation. We wish the management team and Gresham every success in the future.”

Andy Marsh and Ken Lawrence of Gresham will join the board. The four remaining Formation Group PLC businesses will remain part of the listed entity on the AIM market.