Buyout shop the Carlyle Group has acquired a majority stake in The Foundry Visionmongers Ltd., a developer of visual effects software used in movies ranging from Avatar to Alice in Wonderland to Black Swan. Carlyle bought the stake from Advent Venture Partners. Terms of the deal were not released. The founders and management will continue to retain a significant minority stake in London-based The Foundry.
Global alternative asset manager The Carlyle Group (“Carlyle”) announced today that it has acquired a significant majority stake in The Foundry Visionmongers Ltd (“The Foundry”), a developer of visual effects (VFX) software, from Advent Venture Partners (“Advent”) and other stakeholders. Falcon Investment Advisors, LLC (“Falcon”) has converted its current ownership in The Foundry into mezzanine notes in support of the acquisition. The founders and management will continue to retain a significant minority stake and drive the continued growth and customer-focused innovation that the Company has consistently delivered. Financial terms of the transaction were not disclosed.
Headquartered in London with more than 100 employees, The Foundry has established itself as a critical technology partner to the major feature film studios and post production houses in the US and UK. The Foundry’s products have been used to make recent “must see” movies including Avatar, Tron: Legacy, Alice in Wonderland, The King’s Speech, 127 Hours and Black Swan – all award winners or nominees.
Carlyle will support The Foundry’s expansion and invest to develop their specialized product offerings. Furthermore, this investment will facilitate the company’s diversification into other adjacent market arenas as the product range continues to evolve and grow.
Commenting on the transaction, Dr. Bill Collis, CEO of The Foundry said, “Carlyle’s financial strength, extensive network, and track record in the management of software companies are great assets to our business. We’re exceptionally proud of our achievements over the past two years and have benefited significantly from the deep insight and timely guidance provided by Advent. We look forward to partnering with Carlyle and seeking new opportunities in current and new markets as we continue to progress and innovate.”
Michael Wand, managing director and co-head of Carlyle’s European Technology Partners team (CETP), said, “We have been impressed by the high quality of the products and talented management team, and are confident in the excellent growth potential of The Foundry. Carlyle is delighted to be partnering with The Foundry to support the next phase of growth consisting of further international expansion, ongoing product diversification and broadening the application scope for VFX technologies, whilst sustaining its focus on innovation and customer satisfaction.”
Since the management buyout of the Company in June 2009, the management team and founders have worked closely with Advent and Falcon to transform the Company from a best-of-breed plug-in developer to the leading industry VFX software provider through a combination of unique product partnerships, sales execution, channel development and global expansion. During this period, headcount tripled from 35 to more than 100 and growth accelerated, with revenue increasing from £6.1 million to £14.9 million in 2010. The Company expanded its now 4,000-strong customer base to include The Moving Picture Company (MPC), Prime Focus, Dreamworks, Industrial Light and Magic (ILM), Framestore, Cinesite, Double Negative and several other high-end facilities.
Mike Chalfen, General Partner at Advent Venture Partners, commented, “This transaction highlights the high quality growth equity opportunities available in European tech. The Foundry has become the global leader in its market, produced phenomenal revenue and profit growth, and executed ambitious product acquisition and channel development plans. To exceed expectations on all these dimensions required a clear view of where value would be created, and a strong leadership team to sustain tremendous commitment throughout the organisation.”
Equity for this investment will come from Carlyle Europe Technology Partners (CETP) II, a €530 million fund that closed in November 2008. Since 2002, Carlyle’s European Technology team has acquired and invested in 20 companies, supporting their growth, expansion and business transformation initiatives in the technology space.
Arma Partners LLP acted as financial advisors and Morrison & Foerster LLP acted as legal advisors to The Foundry. Carlyle was advised by Travers Smith LLP.
The Foundry management were represented by Clark Holt.