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January 12, 2012

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Bowmark Capital backs £32 million MBO of CSL DualCom

Bowmark Capital has provided GB pound 13 million of equity to finance the transaction, thereby acquiring a majority interest in CSL. For its part Octopus Investments has provided extended facilities to GB pound 10 million, in turn further supporting CSL’s future growth having crystallised its equity investment through the sale.

Mid-market private equity firm Bowmark’s specialist experience of supporting high-growth companies, coupled with its excellent working relationship with CSL’s management team (having tracked the business for the previous two years), are said to be key to the success of the transaction.

Bowmark is “very pleased” to be afforded this opportunity to invest alongside CSL’s senior management team, and is now looking forward to a long-term association within the security market.

Speaking exclusively to Info4Security about the agreement, Bowmark’s investment director Paraag Dave commented: “CSL has an outstanding reputation based on its strong product suite and excellent customer service. We’re delighted to be backing such an experienced management team in the next phase of its development of the business.”

Bowmark comprises an impressive portfolio of companies totalling GB pound 700 million in value.

Jane Vinson, portfolio director with the Octopus Ventures team, said: “Octopus is really pleased by the progress that CSL has made since we partnered with the management team in 2006. By providing extended facilities to the MBO, we can continue to support the business as it looks to grow significantly in the future.”

Vinson added: “This is a great example of how strong relationships between investors and talented entrepreneurs in tandem with flexible funding structures can really help small businesses at various stages of their growth trajectory.”

Pioneer of dual signalling

Many of Info4Security’s dedicated readers will know that CSL pioneered dual signalling (whereby alarm signals are transmitted over both a traditional fixed telephone line and a wireless network) back in 1996.

In doing so, the company offered the first credible alternative to existing alarm signalling while setting the current standard for professional dual path security monitoring.

Dual signalling is now firmly regarded as the standard format for alarm signalling and is duly specified by all of the leading insurance companies.

Since the 2006 MBO, CSL has actively propelled the DualCom product such that it has become the UK’s best-selling dual signalling system and the preferred choice for over 120,000 professional security installations in commercial, retail and residential premises (and the favourite for over 2,000 alarm installers).

Indeed, the CSL brand has grown rapidly over the past five years under the astute leadership of managing director Phil Hollett and Simon Banks, co-founder of the company and its commercial director who was a prime driver behind last year’s massively successful, Government-endorsed 100 in 100 campaign to encourage apprenticeships across the security sector.

Today, CSL manages the signalling for over 125,000 intruder alarms. The company has invested extensively in building a strong management structure and boasts the largest customer-facing team in the industry sector providing unrivalled support, innovation and a track record of 15 years’ experience across the security spectrum.

Speaking about the management buy-out deal, Phil Hollett explained: “We’re delighted to have completed this transaction with our new financial partner, Bowmark Capital. CSL is uniquely positioned to capitalise on the significant opportunities in the security communications market. With Bowmark’s support, we will continue to pursue strong growth in existing and new markets by applying our UK security industry expertise both overseas and in adjacent sectors.”

Hollett added: “We’d like to thank Octopus for its involvement and hard work to date, but that relationship doesn’t end here. Octopus continues to support CSL through debt financing. We look forward to continuing the growth story for many years to come.”

Long-standing relationship with Vodafone

CSL’s long-standing relationship with business partner Vodafone has supported the former in the design of Gemini; one of the most resilient and reliable managed networks in the industry. Gemini is wholly-owned and operated by CSL.

The deployment of geographically diverse servers combined with the DualCom WorldSIM technology has reduced line fault false alarms to less than one in every three years. The DualCom Gemini managed network is the engine that powers DualCom’s signalling integrity and grants all DualCom products with exemplary reliability in the delivery of alarm signals into all of the UK’s Alarm Receiving Centres.

The company’s premium Grade 4 product monitors the integrity of the signalling path every minute, 365 days a year.

CSL DualCom is now positioned for measured growth in existing and new markets by applying the combined expertise of the Board, both oversees and in complementary vertical communication sectors.

In terms of his own perspectives on the deal, Simon Banks explained: “The partnership with Bowmark provides CSL with the opportunity to further invest in these important areas and ensure continued growth for the company which will facilitate further development in our market-leading products and our managed network.”

He added: “While the core of the company will always be embedded within the UK security industry, we will also take the opportunity to expand into other market sectors within Europe. This increased investment will allow CSL to bring new products and solutions to the market more quickly than originally planned which will be to the benefit of our customers and the company as a whole.”

Baker Tilly’s M&A and Private Equity team facilitated the transaction for Octopus.

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