A newly-formed company controlled by funds advised by Apse Capital Limited, Mason Bidco Limited, will acquire the entire issued share capital of TerraQuest for a maximum valuation of £72 million, before locked box adjustments, on a cash and debt free basis. Completion of the Disposal is expected (subject to the approval by Shareholders of the Disposal and receiving MHCLG Consent) to occur in early December 2020.
The long-term strategy of the Mears Group is to be the UK’s most respected and trusted provider of housing solutions.
TerraQuest provides a range of land and planning services to a wide range of customers, notably the National Planning Portal which provides planning and building control application services, processing some 90 per cent. of all digital planning applications in England and Wales. TerraQuest has developed successfully and grown in profitability while under the ownership of the Mears Group. However, the Board considers that the business activities of TerraQuest are different in kind from those provided by the Continuing Group. After a thorough review, the Board concluded that the prospects of TerraQuest would be optimised under new ownership.
Accordingly, the Group commenced a competitive sale process, advised by KPMG. A number of counterparties submitted proposals from which the Board selected Apse as providing the optimal outcome for TerraQuest and its MHCLG partner, as well as Mears Shareholders.
The disposal of TerraQuest will contribute to the Board’s stated objective of reducing the indebtedness of the Group and hence strengthening its balance sheet. The continuing winding down of the Group’s property development activities and the disposal of the domiciliary care activities have also contributed to this objective. The proceeds from the disposal of the TerraQuest Group will be used to reduce the Continuing Group’s indebtedness.
Apse Capital is a London-based private equity firm that specialises in backing tech-enabled B2B information and services businesses in high-growth sectors across Europe. Apse Capital was co-founded by Tim Green, Ashley Long and Vikram Krishna, who have worked together for over fifteen years, have 80 years of combined private equity experience and over the last five years have completed a total of 24 transactions in tech-enabled businesses, with an aggregate Enterprise Value of €1.5 billion. Apse Capital typically backs fast-growing European SMEs with an enterprise value of €50-€200 million.
David Miles, Chief Executive Officer of the Group, commented:
TerraQuest has been a great success story within the Mears Group. Through the provision of both financial and intellectual capital we have created a leading digital and technical services provider to the planning, infrastructure and property sectors across the UK. This transaction secures the next stage of TerraQuest’s development and allows Mears shareholders to realise significant value from this investment.
"The Disposal materially strengthens the Mears Group balance sheet and completes our strategic programme to focus on our core activities of specialist Housing services to local and central government clients. We are also delighted at the support we have received from our relationship banks who, in conjunction with the Disposal, have significantly increased our covenant headroom over the next twelve months.
"Our portfolio of high-quality contracts focused on our core Housing services and the Group’s strengthened balance sheet mean we look to the future with confidence."
The full Press Release can be viewed below: