10 August 2020
Duke Royalty Limited
("Duke Royalty", "Duke" or the "Company")
Accretive follow-on investment into existing Royalty Partner
Duke Royalty Limited (AIM: DUKE), a provider of alternative capital solutions to a diversified range of profitable and long-established businesses in Europe and abroad, is pleased to announce a follow-on investment of £3.0 million into its existing Royalty Partner Welltel (Ireland) Limited ("Welltel"), the Dublin based telecoms, IT and network specialist.
· Investment will enable Welltel to complete a further strategic acquisition of Dublin-based Intellicom Ireland Limited ("Intellicom")
· The financing is expected to be accretive to Duke's earnings, delivering higher distributions of approximately £1.8 million per annum, and is in line with the Company's standard terms
· Intellicom is the fifth Welltel acquisition that has been financed with Duke's capital
· Intellicom is a long-standing, profitable telecommunications company with a complementary product offering that provides both attractive product and customer synergies to Welltel
· Investment makes Welltel the largest single investment in Duke's portfolio
Founded in 2005, Intellicom specialises in the supply, installation and support of IP telephony solutions to over 350 corporate clients across Ireland. Intellicom's inter-connect capabilities presents attractive synergy opportunities to the enlarged Welltel group, whilst its strong corporate customer base provides high levels of contracted, recurring revenue, with very low historical customer churn and a long track record of profitability.
Intellicom's customers will further benefit as a result of being able to satisfy all of their IT and communications needs from a single provider offering cloud, telephony, unified communications, connectivity, proactive IT and cybersecurity.
This follow-on financing represents the fifth tranche of capital invested by Duke in the business since 2017, providing on-going support for Welltel's acquisition roll-up strategy. Welltel has grown to be one of the largest technology service providers in Ireland, with over 3,500 enterprise clients. It has continued to expand year-on-year through a combination of strong organic growth and strategic M&A and in 2019 was named in the Deloitte "Fast 50" (Ireland) for the sixth consecutive year, as well as the "Fast 500" (EMEA) for the first time.
Based on the increased total investment of £13.5 million into Welltel, Duke will be entitled to higher distributions of approximately £1.8 million per annum beginning in August 2020, which represents a pro forma cash yield of approximately 13.2% based on Duke's total pro forma invested capital. In line with Duke's strategy to continue backing businesses which are seeing opportunities in the current climate, Duke remains supportive of Welltel's buy and build strategy and retains the right, but not the obligation, to provide additional senior secured funding to Welltel as part of the overall funding solution for any future acquisitions.
Neil Johnson, CEO of Duke Royalty, said:
"We are proud to be supporting Welltel once again with our flexible, long-term offering, as it continues to execute on its growth strategy by successfully combining organic growth with strategic M&A. Intellicom represents another clear value-add acquisition for the Group, providing both synergies and cross-selling opportunities.
"Welltel is a clear example of one of our Partners which is benefitting in the current climate and we are pleased to be able to back them. Welltel's diversified IT product offering and proven ability to integrate acquisitions, along with Duke's financial partnership, has resulted in Welltel being able to continue to build the firm through opportunistic M&A. This transaction shows that Duke remains open for business and we continue to investigate a number of exciting other deal opportunities which will diversify our portfolio of long standing, profitable businesses."
John Quinn, Chairman, Welltel, said:
"Welltel has made six acquisitions in total, which in combination with strong organic growth makes us the fastest growing integrated voice and data solutions provider in Ireland. Whilst remaining focused on our organic growth, we are actively seeking further acquisitions as part of our long-term growth strategy, as we continue to enhance our service offerings and integrate new people, products and technical skills.
"We are very pleased to have Duke Royalty as a long-term, supportive financing partner as we look forward to the next stage of our growth journey and continue to strengthen our customer value proposition."
For further information, please contact www.dukeroyalty.com, or contact:
Duke Royalty Limited
Neil Johnson / Charlie Cannon-Brookes / Hugo Evans
+44 (0) 1481 741 240
Cenkos Securities plc
(Nominated Adviser and Broker)
Julian Morse / Michael Johnson / Stephen Keys / Callum Davidson
+44 (0) 207 397 8900
Elisabeth Cowell / Ian Silvera / Megan Kovach
+44 (0) 20 3757 6880
About Duke Royalty
Duke Royalty Limited provides alternative capital solutions to a diversified range of profitable and long-established businesses in Europe and abroad. Duke Royalty's experienced team provide financing solutions to private companies that are in need of capital but whose owners wish to maintain equity control of their business. Duke Royalty's royalty investments are intended to provide robust, stable, long term returns to its shareholders. Duke Royalty is listed on the AIM market under the ticker DUKE and is headquartered in Guernsey.
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