KCP sees five times return on exit of listed Gear4Music
Private equity house Key Capital Partners (KCP) has exited its interest in Gear4Music, selling its remaining shares for £9m. The £55m turnover online musical instrument retailer has seen tremendous growth in recent years following KCP’s backing in 2012 when it took a 30% stake in the company. Following the sale of KCP’s remaining stake, and earlier partial exits, KCP has achieved a five times money multiple.
Established in 2003 and based in York where it has a showroom and distribution centre, Gear4Music is the UK market leader of online sales of musical instruments including guitars, drum kits, digital pianos, saxophones and cellos, plus leading recording and studio equipment.
KCP’s £3.4m investment, made in March 2012, enabled Gear4Music to expand its international e-commerce platform which has been central to its success and rapid growth. At the time, the company had sales of only £10m, but it quickly went on to complete a successful IPO in June 2015, valuing the company at £28m and raising £10.3m of cash. At the time of KCP’s final sale of shares the company was valued at £73m. Gear4Music has recently reported that overall revenues have increased by 73% with European sales from March to September 2016 increasing by 160%.
Peter Armitage, partner at KCP, and a non-executive director of Gear4Music has now stepped down from the Board.
He said: “Playing a key role in the phenomenal growth of this retail success story has been a very exciting experience. It has been a privilege to work with such a talented team and help guide them through the IPO process.”
Andrew Wass, founder and chief executive of Gear4Music, said: “KCP’s decision to invest in the business in 2012 has been integral to our subsequent development and setting us on the path to growth. With Peter stepping away from the Board, now would seem the appropriate juncture to recognise the very significant contribution they have made over a number of years. I would like to wish both Peter and KCP all the very best in their future endeavours.”
KCP is a leading investor in the smaller buy-out market making investments of £3m-£15m in profitable growing companies, and last year announced a new £80m fund that is open for investment into high growth businesses across the UK.