Gresham backs proven team with an initial £6.6m towards their buy and build strategy.

Gresham is backing a highly experienced IT outsourcing management team with an initial £6.6m of working capital to expand its business, 2escape2, with a buy and build strategy in the IT services market. The London team of Gresham, the regionally based private equity house, led the funding of 2escape2's latest acquisition, TBS.

2escape2 was set up last year by chief executive Terry Burt, aged 46, and chief operating officer Mark McVeigh, aged 43. With Gresham's backing they plan to use 2escape2 as a vehicle to buy and build a balanced portfolio of companies focused on the support, networking and managed services sector of the IT services market.

The two bring an impressive track record to this venture. Through a combination of organic growth and a series of strategic acquisitions into 12 countries, they expanded turnover at their previous IT services business, 4Front Technologies, from $11m in 1995 to $253m in 2000. They sold 4Front the same year to NCR for $270m.

As a first major step in the Gresham-backed deal, 2escape2 is buying TBS, the UK-based IT services arm of Telenor, the Norwegian telecoms business. TBS will bring around £25m this year in revenues from long term contracts from customers such as the MoD, Lombard and the Highways Agency. Burt, McVeigh and colleagues will work closely with the TBS management team to maintain the highest levels of customer service and grow the business quickly.

IT outsourcing has been the best performing sector of the UK software and IT services market for several years, growing at 14 per cent a year from 1999 to 2002, despite the general downturn in IT expenditure. The UK IT outsourcing market is currently estimated to be worth £7.5bn.

2escape2's existing four IT services businesses concentrate on mid-sized contracts generating revenue of £500,000 to £3m per year. It also acts as a specialist niche sub-contractor in partnership with its major customers which include IBM and Pfizer.

Burt explains: "We plan to develop a chessboard of IT services covering managed services, infrastructure, maintenance and training. We are delighted to have Gresham on board as our funding partner. We were impressed by Gresham`s ability to grasp our business quickly and give us the certainty we needed. They delivered the funding on the original terms in just five weeks to meet our timetable for the acquisition of TBS. We look forward to working with them over the next few years." Burt anticipates growing the business to a turnover level of around £200m by 2006.

Gresham has considerable experience backing successful companies in the support services sector including commercial cleaning group, Pall Mall, and Parkman, the consulting engineer and asset management firm. 2escape2 shares a similar business model which revolves around effective people management and high utilisation of staff on long term contracts with high visibility of revenue.

"Terry and Mark have outstanding credentials in terms of relevant experience and the proven ability to create shareholder value. We are delighted to be backing them to grow their business over the next few years," says investment director, Paul Canning, who led the deal for Gresham and will join the 2escape2 board as a non-executive director. David Wragg, TBS finance director, is participating in the management buy-out element of the TBS acquisition along with three other TBS executives.

2escape2 was introduced to Canning by Dermot Mathias and Stephanie Harris-Hays of BDO Stoy Hayward London who advised the management team.

David Raff of DLA acted as Gresham's legal adviser and Ian Paterson of Grant Thornton was its financial adviser. John Elgar of Nicholson Graham Jones acted as 2escape2's legal adviser. Ian Glanville of KPMG Reading advised Telenor on the sale of TBS.