THE IRISH private equity company that bought out the Racing Postnewspaper for £170 million (€215.5 million) last October expects the title and its sister operations to make post-tax profits of £1.51 million in the year to September and increase its annual net profit to more than £5 million by 2012.
FL Partners, led by financiers Peter Crowley and Neill Hughes, were backed by Anglo Irish Bank when acquiring the assets last year from Trinity Mirror. Other assets in the FL portfolio include Dublin-based bedding company Kayfoam Wolfson and Cavan-based power tool firm Tomsburg.
A confidential prospectus for a Racing Post fund-raising last February shows that clients of Anglo Irish Bank Private Banking were to have 53 per cent of the equity in the business while FL Partners had 32 per cent. The remaining equity is held by private investors, including racing manager Dermot Cantillon and hotelier Michael Holland, who with four other individuals and companies invested some £8.75 million.
FL Partners declined yesterday to comment on the fund-raising, through which Anglo Irish private bank sought to raise £20 million from clients, although it is understood to have closed successfully. The bank's prospectus said FL Partners was targeting an exit from the company in about five years. "It is anticipated that the most probable exit may be through a trade sale or refinancing," it said.
The acquisition price represented a multiple of 9.74 times the projected earnings before interest tax depreciation and amortisation (EBITDA) of £17.46 million for the year to September. According to the prospectus, FL is confident that an EBITDA multiple of 11 or 12 times can be achieved on exit, "should the company's growth plans be achieved".
Revenues in the year to September next are projected to come in at £49.63 million, rising to £49.89 million, £51.31 million, £52.8 million and £54.09 million in successive years.
EBITDA is projected to increase to £18.73 million next year and to £20.43 million, £22.27 million, and £23.73 million in successive years. Earnings after tax are projected to increase to £2.11 million next year and to £3.05 million, £4.21 million and £5.19 million in the following years.
Average circulation of the Racing Postwas 74,381 in 2006, rising to 170,000 daily during racing festivals. In addition to the Racing Post, the deal includes horse-racing form guide Raceform, sports book publisher Highdown, a 30 per cent stake in racing website "thebettingsite" and weekly papers Racing & Football Outlook, Raceform Updateand the Racing Post Weekender.
FL Partners has a budget of £4.7 million in the five-year period for "digital development". The deal was financed by £130.5 million from Anglo Irish Bank, £18 million in bridging payment-in-kind notes from FL Partners and investor share subscriptions of £28.75 million.
