The two founders of Dublin directory inquiries company Conduit are set to realise almost €30 million after the sale of the company for €90 million to an investment fund and a US directory inquiries group, writes Arthur Beesley, Senior Business Correspondent.
Conduit is best known as the operator of the 11850 inquiries service and carries out call-centre work for companies such as Vodafone UK and Aer Lingus.
Chief executive Liam Young will receive €17.1 million for his 19 per cent stake, and former chairman Eddie Kerr will receive €12.6 million for his 14 per cent following the sale of the company to the investment division of the Bahraini bank Investcorp SA and inquiries group InfoNXX. Investcorp was previously an investor in the Spectel phone-conferencing business.
The sale represents a big turnaround in the fortunes of Conduit, which was valued at only €15 million in March 2004 when Bank of Scotland (Ireland) invested in the company after it made heavy losses. The bank held 25 per cent before the sale, and a group of its biggest private clients held another 25 per cent.
Other beneficiaries of the deal include an Anglo Irish Bank investment fund and businessman Pat McDonagh, founder of the Riverdeep educational software company.
While Mr Young and other members of the Conduit management plan to stay with the company, the sale comes after the recovery of a business which encountered severe difficulties following a flotation in Germany at the height of the technology bubble in 2000.
Mr Young and Mr Kerr established Conduit 10 years ago to take advantage of the deregulation of European directory inquiries markets. It gained a foothold in the Irish market when it opened and, later, entered the market in Switzerland, Spain and Austria.
The expansion was financed through a flotation on the German Neuer Markt exchange, which valued Conduit at €280 million. The company was valued at only €55.4 million less than three years later, when it was taken private by Mr Young, Mr Kerr and a management team.
The refinancing by Bank of Scotland (Ireland) followed an expensive foray into the British market, which failed to live up to expectations and resulted in hundreds of job losses. Conduit was advised during the sale discussions by IBI Corporate Finance, and InfoNXX was advised by Merrion Capital. Investcorp did not take external advice.