Edotech, the former inhouse statement printing operation of Barclays Bank, has been sold to business process outsourcing group Astron for £130 million - £115 million more than its MBO valuation four years ago.
Edotech was bought out by management in May 2000 through a £15 million MBO, in a transaction led by Barclays Private Equity. The UK bank invested £12 million of its own money for a majority stake in the firm. The management buy-out was the first of its kind in the banking sector, freeing up Edotech to attract additional third party business.
Since the MBO, Edotech has seen a six-fold growth in operating profit from £2 million in 2000 to c.£12 million in 2003. The combination of Edotech and Astron is expected to create a transactional document printing operation large enough to challenge the broader IT outsourcing groups.
David Weymouth, Barclays Chief Information Officer, describes the sale to Astrom as "a highly successful conclusion to what was an innovative strategy of backing a management buy-out of a non-core business for Barclays".
He says the current valuation of the business is "far beyond initial expectations", with the sale to Astron valuing Barclays' initial £12 million investment at £75 million.
News of the deal was slipped out on Thursday - just ahead of the four-day Easter holiday break.