Business Weekly - Cambridge, UK

Digital handset developer, Sepura is being tipped to complete a spectacular reversal of fortunes since being bought out of administration for £1 in 2002. The company is now believed to be worth £250m.

According to reports in the Square Mile, Sepura will debut on the London Stock Exchange via a placing next month, with the company’s main shareholders - four senior figures connected with investment bank, Goldman Sachs – selling about a quarter of their holdings.

The IPO, on which Goldman and Citigroup are said to be advising, has been a long-time in the making. Business Weekly first reported Sepura’s intention to go public in May 2006.

The company competes against global giants such as Motorola in the TETRA handsets marketplace and, for a medium-sized operation, is more than holding its own.

In the last two months alone, Sepura has announced contract wins in Korea, Sweden and Russia as well as the use of its handsets by UEFA officials in the Champions League Final in Athens.

The company predicts that the continued migration from analogue to digital commun-ications by the various public safety and emergency services organsiations around the world will continue to drive growth.

The company has won this newspaper’s East of England Business Awards in both the ‘private company’ and ‘intern-ational trade’ categories.

Sepura’s previous incarnation was as Simoco Digital, which provided digital network infrastucture as well as handsets.

The networks business, which ultimately failed to consolidate an empty order book with payroll in excess of 150, is widely understood to have been at the root of Simoco Digital’s demise. Administrators reported that the handsets business, meanwhile, had a full order book.

This is the factor that accounted for Michael Sherwood, Jonathan Green, Sion Kearsey and John Drinkwater – all formerly or currently of Goldman – to make their one pound punt.

The four could net a total of £46m following the placing, according to City sources.

Sepura’s last reported accounts reveal turnover of £45.4m, with EBITDA of £10.4m.

Sepura’s float will be a shot in the arm for the technology sector after a fairly quiet last 12 months in which the window was left slightly ajar but only the leanest and bravest businesses dare try to squeeze through it.

Last year 367 IPOs raised £29,438m (89 IPOs on the Main Market and PSM raised £20,124m; 278 IPOs on AIM raised £9,315m). In 2005, 423 IPOs raised £16,207 million (88 IPOs on the Main Market and PSM raised £10,674m; 335 IPOs on AIM raised £5,632m).

To the end of April, 2007, there have been 78 IPOs, which have raised £7,132m so far this year – 26 on the main market totalling £5,650m and 52 on AIM that have realised £1,481m.

Corporate finance specialists have been kept particularly busy, though, on Mergers & Acquisitions thanks to a positive European boom in such deals.

The value of announced M & A’s in the last year topped $4 trillion (£2 trillion) for the first time.

Cash-only deals were worth almost $3 trillion (£1.48 trillion) and share-only transactions $602 billion (just over £300 bn).

The combined price tag of European targets, almost $1.6 trillion, was the highest ever, and just pipped America’s total.

Cross-border deals were worth $1.3 trillion, another record, of which $219 bn went on American companies and $210 bn on British firms.

Finance, telecoms and property, which together accounted for 34 per cent of the total volume, were the most popular targets.

Some 17 per cent of all activity worldwide has been funded by private equity firms focusing on telecoms, finance, healthcare, utilities and real estate.

For the East of England there have been three blockbuster deals in the last year or so.

One was the £6.7bn acquisition by Indian group Tata of steel giant Corus, which employs 900 people in Corby, Northants. Tata has several other industrial interests in the East of England.

Spanish infrastructure specialist Ferrovial grabbed Stansted Airport owner, BAA, for £10.7bn while Admiral, a consortium led by Goldman Sachs, took ABP – owner of several East Anglian ports – for £2.8bn.

Lower down the financial scale but significant in its respective sector was the acquisition of Cambridge and King’s Lynn-based manufacturer Hansatech for around £5.8m by quoted Swedish company Partnertech. Luton based Hunt-leigh Healthcare was lined up by Swedish rival Getinge for £409m.

In biotech, AstraZeneca followed up its January 2006 £122m acquisition of Cambridge based KuDOS and popped back in the summer to take Cambridge Antibody Technology for £702m.

Not to be outdone, Glaxo-SmithKline ended 2006 by purchasing another Cambridge biotech, Domantis, for £230m.

And in March of this year, Japanese company Takeda, based in Osaka, swallowed Paradigm Therapeutics for an undisclosed sum.

Cambridge bluetooth wireless specialist CSR began 2007 with the combined £56m acquisition of NordNav Technologies and Cambridge Positioning Systems.

Corporate finance specialists reckon there are many more deals to come in the second half of 2007.