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MARLBOROUGH PARTNERS’ Q4 2012 REPORT SHOWS IMPROVED LIQUIDITY AND RISE IN LEVERAGED LOANS

London, Monday January 28 2013

Marlborough Partners, the independent leveraged debt advisory firm, today published its report on the leverage finance market for private equity deals and portfolio company refinancings in Q4 2012.

The quarterly snapshot, analysing data from a number of sources, shows issuance of €2.6bn of leveraged senior loans in the UK, a 110% increase on Q3 which itself saw a rise on Q2. Pricing tightened to Euribor+488 basis points, similar to the level at the end of 2011.

Total volumes for UK leveraged senior loans in 2012 ended at €8.0bn, 11% down on 2011. In Europe however, issuance was some 30% down on 2011, highlighting the UK’s more robust private equity market.

The high yield market continued to be strong in Q4, with primary bond yields moving towards record lows. Marlborough expects this trend to continue through early 2013. Private Equity Funds continue to see the current liquidity as an opportunity to improve existing capital structures of their portfolio companies, extend loan maturities and return dividends to their investors.

Increased liquidity will also enable new buyouts and more opportunistic lending in the form of recapitalisations and refinancings in the first half of 2013, though Marlborough cautions that the second half of the year may be less positive, as reinvestment periods for 60% of CLOs come to an end.

Commenting on the quarterly report, Marlborough partner, Romain Cattet, says: “As the CLO situation develops, we anticipate the market will witness more cautious underwriting and potentially higher pricing in the latter part of 2013 as liquidity tightens. ”

The iTraxx Europe Cross-Over index (a key indicator of pricing expectations for sub-investment grade risk), followed a downward trend after a volatile Q3. By mid-January, the index was at 420 basis points, a level not seen since July 2011.

One trend that emerged during 2012 was the relevance of the retail bond market for private companies. Since its inception in 2010, the Order Book for Retail Bond (ORB) has seen 24 issues launched for a total of £2.5bn. 2012 saw an acceleration of this trend with 15 issues completed. Historically limited to PLCs and companies with a large asset base, retail bonds provide access to a private investor base through a stock exchange listed and therefore liquid product, significant covenant headroom and a lighter documentation process compared with a high yield issue.

Cattet added” “While the retail bond market is not yet a primary source for mid-market LBOs if it develops, as we believe it will, refinancing processes will need to take it into account as a credible, alternative to bank debt.”

Marlborough's most recent transactions include advising Bregal on the leveraged recapitalisation of QA, advising Charterhouse on the financing for add-on facilities for Tunstall, and advising Advent International on staple financing for Xafinity Consulting.

Equiniti Group sells Xafinity Consulting to CBPE Capital

The Equiniti Group is pleased to announce that it has reached agreement to sell its Xafinity Consulting business to CBPE Capital LLP. The transaction remains subject to certain conditions, including regulatory approvals, and is expected to close during the first quarter of 2013. Terms of the transaction have not been disclosed.

The Group was created in 2010 by bringing together the Xafinity pension administration, software and consulting business with the outsourcing and share registration provider Equiniti. Its forward strategy is to develop its Business Process Services (BPS) offering under the Equiniti Group brand with a focus on larger scale complex administration and financial processing contracts. The Group’s market-focused divisions are: Pensions Solutions, Shareholder Solutions and Commercial Solutions.

The sale of Xafinity Consulting is consistent with this strategy to refine the Group’s core focus. Xafinity Consulting, comprising Actuarial, Pensions, Healthcare and Employee Benefit Consulting and administration as well as, Self Invested Pensions and Independent Trusteeship, will continue to operate under the Xafinity brand. Paymaster and Claybrook remain within the Equiniti Group.

The pension market continues to be central to the Equiniti Group’s BPS strategy. It currently administers the pension benefits of nearly three million scheme members, pays over 30% of UK pensioners and supports over 10 million pension scheme members with its software applications.

In April 2012 the Equiniti Group’s Paymaster business became the private sector partner for the mutual joint venture, MyCSP, administering pensions for 1.5 million Civil Service Pension Scheme members.

The Equiniti Group is committed to further invest in opportunities to extend and enhance its service range. Recent acquisitions included peterevans - leading provider of technology solutions for the financial services industry - and the Corporate and Employee Services from NatWest Stockbrokers.

Wayne Story, Equiniti Group Chief Executive said: “Our strategy is to develop the Equiniti Group as a market leading specialist Business Process Services provider. Having considered the strategic alternatives, we believe that separating the Xafinity Consulting business now is the right course of action for both Xafinity Consulting and the wider Equiniti Group, enabling each to a have a clear focus. We fully expect both businesses to continue to work in close partnership in key areas of mutual interest in the pensions market.”

Robert Birmingham, Managing Director of Xafinity Consulting said: “Xafinity Consulting will continue to concentrate on its existing markets within which we have significant ambitions to develop and expand our range of services and products. The expertise, funding and supportive approach of our new owners will set us up well to achieve these ambitions to the benefit of our clients and our business.”

MARLBOROUGH PARTNERS’ Q3 REPORT ON PRIVATE EQUITY LEVERAGE MARKET

London, Monday October 22, 2012

Marlborough Partners, the independent leveraged debt advisory firm, today published its report on the leverage finance market for private equity deals and portfolio company refinancings in Q3 2012.

The quarterly snapshot shows that according to S&P data, issuance of €1.2bn of leveraged senior loans in the UK, representing a 17% increase on the previous quarter. However, volumes year-to-date at €4.8bn are still less than half the €8.6bn issued in the same period in 2011.

A buoyant high yield market in August and September combined with a lack of primary deal flow resulted in excess institutional demand for paper in the upper end of the loan market, with sponsors seizing the opportunity to launch repricing waivers and dividend recapitalisations, such as the RAC and Formula 1. In the mid-market, a similar lack of primary deals and refinancings means that many banks remain behind budget and are therefore keen to deploy capital.

The iTraxx Europe Cross-Over index (a key indicator of pricing expectations for sub-investment grade risk), again remained volatile, reaching 689 basis points in July before falling to 460 basis points in mid-September only to rise sharply again at the end of the quarter to 568 basis points.

The Q3 report focuses on the growth in Europe over the past 18-24 months of Unitranche, or Stretched Senior financing, as a credible alternative source of finance for the mid-market. Demand for Unitranche financing has been driven primarily by the attractive commercial structures and flexibility on offer, as well as by speed of execution of deals due to the ability to source an entire tranche from a single funding source, or small club for larger deals.

To date, the Unitranche market is almost entirely dominated by dedicated credit and mezzanine funds, but institutional lenders and banks have, from time to time, participated opportunistically.

Whilst there have been a number of publicly disclosed European Unitranche deals (most recently, the refinancing of IMO Carwash in the UK and the LBO of Unipex Group in France), there is still no market consensus on commercial structuring or standardisation of documentation. Participants lending in Europe vary in their approach, with continental European providers having a more LMA (Loan Market Association)‘bank-like’ slant in structuring deals and US players more willing to customise.

Commenting on the quarterly report, Marlborough Managing Partner, Jonathan Guise, says: “Our expectation is that there will be a lot more Unitranche funds coming to market in the next six to 12 months and this, along with strong periodic high yield bond issuance, will continue to provide an alternative source of liquidity for private equity deals and refinancings, as bank balance sheets continue to contract. Running a Unitranche alternative in conjunction with exploring a senior or senior and mezzanine financing for mid-market transactions will become increasingly common and something we strongly recommend”.

Marlborough's most recent signed transaction was advising Advent International on the financing of its acquisition of Danish software solutions company, KMD, from EQT and ATP Private Equity Partners.

The Company has recently launched an innovative range of internet offerings focusing on digital education and e-healthcare. KMD’s operations extend across four locations - Copenhagen, Århus, Odense and Aalborg. In 2011 the Company reported revenue of DKK 4,266 million.

Commenting on the acquisition, Fred Wakeman, Managing Partner of Advent International, said:

“We are delighted to partner with the KMD team. KMD has a long history of growth and innovation and our investment will allow the Company to increase the pace and scale of its growth and ongoing operational excellence.”

John Woyton, Director of Advent International, commented:

“KMD is a market leader in Denmark, one of the most advanced governments in terms of IT adoption and eGovernment initiatives. We believe that KMD has world-class solutions and that the Company has strong potential to grow internationally. We are committed to supporting this unique and critical business and look forward to working in partnership with the management team to grow an even more successful business.”

Lars Monrad-Gylling, CEO of KMD, said:

“We are extremely excited that Advent International sees such potential in KMD. KMD has a solid market position, and a unique insight into and competence in delivering software solutions to the public sector. The new ownership is a great opportunity for us to strengthen our position. When KMD grows and develops, it has a positive impact on all our customers.”

Having invested in over 50 technology companies over the past 25 years, Advent is one of the leading investors in the global technology sector. In addition, with a dedicated Nordic team and a 20 year history of investment in the Nordics, Advent is a proven investor in the region.

Advent was advised on the transaction by Credit Suisse, Deloitte, Marlborough Partners, McKinsey & Company, and Weil, Gotshal & Manges.