Last checked at 16 Mar 2020 07:00
16 March 2020
Duke Royalty Limited
("Duke Royalty", "Duke" or the "Company")
£1 Million Follow-On Contribution with Existing Royalty Partner
Duke Royalty Limited (AIM: DUKE), a provider of alternative capital solutions to a diversified range of profitable and long-established businesses in Europe and abroad, is pleased to announce a follow-on investment of £1 million into its existing royalty partner Lynx Equity (UK) Ltd. ("Lynx UK").
Lynx UK will use this contribution from Duke towards the acquisition of Danish manufacturer, Arkas A/S ("Arkas"), which was agreed in February 2020. This acquisition is Lynx UK's sixth acquisition within the UK and Europe and this follow-on investment further diversifies both Duke's portfolio and Lynx UK's revenue and EBITDA base.
With Duke's investment in Lynx UK now increased to £13 million, the Company is entitled to higher distributions of £1.7 million per annum, beginning in April 2020, representing a pro forma cash yield of 13.0% on total invested capital. This follow-on transaction will also increase the security of Duke's investment. All other terms of the £1 million contribution are the same as Duke's previous investment made into Lynx UK.
Neil Johnson, CEO of Duke Royalty, said:
"This latest deal increases our royalty income and further diversifies our portfolio, but most importantly, it improves the royalty coverage ratio for the portfolio. Lynx UK has a strong financial track record which has facilitated two consecutive positive annual adjustments previously. Lynx's focus on acquiring profitable companies at a reasonable multiple is key to their success over the last 12 years. This follow-on epitomises our strategy to become a long-term funding partner to businesses in the UK and Europe."
About Arkas
Arkas is a private, profitable manufacturer of bespoke garage doors and single doors for commercial and residential applications. Founded in 1986, Arkas is the only manufacturer of exclusively Danish-made wood doors and garage doors and has built its reputation based on its high level of quality, customisation and fast turnaround. Currently, Arkas products are sold through over 400 points of sale across Denmark including the country's leading timber merchants.
Duke Royalty Portfolio
Following this follow-on investment into Lynx, Duke's portfolio of core royalty investments is as follows:
Royalty Partner | Total Investment Amount | Date of Initial Investment |
Temarca B.V. | €14,682,000 | April 2017 |
Berkley Recruitment (Group) Limited | €1,300,000 | June 2017 |
Welltel (Ireland) Limited | £8,128,000 | June 2017 |
Lynx Equity (UK) Limited | £13,000,000 | October 2017 |
Xtremepush Limited | £2,000,000 | February 2018 |
Trimite Global Coatings Limited | £11,000,000 | March 2018 |
United Glass Group Ltd (formerly Brownhills) | £7,500,000 | April 2018 |
Step Investments Limited | £4,240,000 | June 2018 |
BHPC Limited | €4,600,000 | August 2018 |
InterHealth Canada | £10,000,000 | August 2018 |
Brightwater Selection (Ireland) Limited | £9,355,000 | September 2018 |
MRDB Holdings Limited Group | £10,000,000 | February 2019 |
**ENDS**
For further information, please contact www.dukeroyalty.com, or contact:
Duke Royalty Limited | Neil Johnson / Charlie Cannon-Brookes / Hugo Evans | +44 (0) 1481 741 240 |
Cenkos Securities plc (Nominated Adviser and Broker) | Stephen Keys / Callum Davidson / Julian Morse / Michael Johnson | +44 (0) 207 397 8900 |
Newgate Communications (PR) | Elisabeth Cowell / Ian Silvera / Megan Kovach | +44 (0) 20 3757 6880 Dukeroyalty@newgatecomms.com |
About Duke Royalty
Duke Royalty Limited provides alternative capital solutions to a diversified range of profitable and long-established businesses in Europe and abroad. Duke Royalty's experienced team provide financing solutions to private companies that are in need of capital but whose owners wish to maintain equity control of their business. Duke Royalty's royalty investments are intended to provide robust, stable, long term returns to its shareholders. Duke Royalty is listed on the AIM market under the ticker DUKE and is headquartered in Guernsey.
Royalty Partner - Lynx UK
Duke entered into a royalty agreement with Lynx UK, a wholly-owned subsidiary of Lynx Equity Limited ("Lynx (Canada)"), on October 5, 2017 to finance Lynx UK's acquisition strategy as its "preferred European capital provider" up to a total investment pool of £15m in tranches on a drawdown basis with proceeds being used to acquire target companies in Europe.
Lynx UK's European portfolio currently includes Denmark's PartnerService, Sundby Trapper and Arkas, and UK's Signalhome, Label Express and Day2 Interiors.
Lynx (Canada) is a Toronto-based private company founded over 12 years ago with a portfolio of more than 50 operating companies and revenue exceeding C$500 million, that seeks to acquire, own, and operate mature, old-economy businesses, with no intent of sale. Lynx Equity's portfolio businesses operate in a diverse range of industries, and typically produce between $750,000 to $2,500,000 of EBITDA.
The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.