Portfolio: Private Equity: Exit

JCRA Group Ltd

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£13.6m management buyout of financial risk advisory company, JCRA. We achieved a successful exit in just over two years.

Investment highlights

  • Date of investmentAugust 2017
  • SectorFinancial services
  • StatusExited December 2019
  • ReturnsUndisclosed

In conversation with Jackie Bowie - former CEO of JCRA

Jackie Bowie, former CEO of portfolio company JCRA, explains why the management team chose Connection Capital for their MBO transaction, how value was added during the period of investment, and her advice for management teams considering private equity.

The company

JCRA was founded 28 years ago and has grown into the leading financial risk management advisory firm in the UK. In recent years it has built an emerging North American presence and delivered growth into Europe from its UK base. Globally, JCRA is one of the leading advisory firms in its ‘Over the Counter’ derivatives niche and is widely recognised as having high levels of technical capabilities and quality of advice, particularly for more complex and larger transactions.

Investment rationale

The first thing which attracted us to JCRA was the high-quality management team. Headed by CEO Jackie Bowie, management had deep sector experience, coupled with a long history with the company, which had established itself as a market leader in the UK and Europe with a foothold in the North American market. Demand for the company’s services had increased due to a growing market, with FX volatility on the rise and a possibility of future interest rises, after a period of historic lows following the financial crisis.

The growth strategy

At the time of the investment, growth was expected to come from:

  • Continued growth in its existing European and North American
    businesses
  • Increased need for its services due to volatility in both
    interest rates and FX
  • Improving systems and technology to deliver simpler
    mandates more cheaply, thus allowing it to compete more
    effectively for this segment of the market, as well as the
    larger, more complex work in which it already excelled.

Our assessment of the quality of the team at JCRA proved accurate but the investment was not without its challenges. Most notably, the impact on transaction volumes in its core real estate sector from Brexit uncertainty that prevailed throughout our time invested in the company. This put pressure on the company’s ability to grow into Europe as swiftly as anticipated. The very low interest rate environment also impacted interest rate hedging volumes.  This led to a greater emphasis on the FX advisory side of JCRA's business as an identified growth opportunity.

The eventual exit was an illustrative example of the benefits of having courage of conviction with regards the company’s strategy, of backing and supporting a good team and accurately assessing the Company’s position in its marketplace. JCRA's market leading presence in the sector outside of the US meant it remained a highly attractive target.  There were exploratory discussions regarding a merger with another business in the sector and then its eventual sale to Chatham Financial.

"Connection Capital were a very supportive partner and backed the growth ambitions of the management team. They were flexible in their approach and understood that technology development was a core aspect of the longer term aspirations of JCRA, taking a longer term view on the investment expenditure which would be required to achieve that."

Jackie Bowie, CEO of JCRA

The exit

In late 2019, JCRA was acquired by Chatham Financial, a US-based financial risk management advisory and technology firm, as part of its strategy to further develop its business in Europe and strengthen its pre-eminent position in the global hedging and financial risk advisory space. Chatham was identified as one of the most likely acquirers of the business in Connection Capital’s diligence process and so it proved.

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