Hermes Private Equity (HPE), the private equity arm of Hermes Pensions Management, has acquired Mayfair Gaming, a bingo operator with eight clubs across the UK, from Risk Capital Partners (RCP) for an undisclosed sum.
RCP, owned by its three directors including entrepreneur Luke Johnson, originally backed the management buy-in of Mayfair in June 2004 through an £18 million (€26 million; $31 million) funding package alongside the Royal Bank of Scotland.
Mark Farrer-Brown, director at RCP, said the sale of Mayfair Gaming generated a money multiple of 2.2x and an IRR of 62 percent.
Mayfair Gaming operates bingo halls under the Riva Bingo brand in Aberdeen, Pudsey, Streatham, Bristol, Brighton, Newark and two sites in Newcastle. The business, which plans to launch a ninth site later this year, reported turnover of £12 million in 2005 and has a total membership of 131,000.
According to HPE, Mayfair Gaming’s management team, led by CEO Simon Hannah, alongside finance director Paul Viner and operations director Mark Jepp, will remain in place and reinvest a proportion of their proceeds.
HPE said it plans to work alongside management to grow the business through a niche rollout, targeting locations appropriate for a smaller operator to serve a local customer base.
Last September, HPE held a first and final close of its £250 million second fund, Hermes Private Equity Partners II, its first vehicle to receive commitments from a third-party investor, the Royal Mail Pension Plan.
London-based RCP traditionally invests its own capital on a deal-by-deal basis, specialising in MBOs, MBIs and development capital transactions worth between £10 million and £50 million.
According to Farrer-Brown, however, RCP is currently investigating options for a future third-party fundraising. “We invest our own money, but raising capital for a fund is something we are exploring, so showing good returns on Mayfair Gaming helps our story and shows what we can do,” he said.
Risk Capital doubles money on bingo firm
Risk Capital Partners, which has sold UK bingo operator Mayfair Gaming to Hermes Private Equity, is understood to be considering launching a debut third-party fund.
