Deal Completion: Benefex

Spectrum Corporate Finance has successfully led the raising of growth capital for Benefex in a deal involving the first ever investment by the Business Growth Fund.  The BGF has invested £4.2m of development capital and will take a minority stake after being introduced to the business by Spectrum who were retained by Benefex to raise capital to fund exciting new growth opportunities.  Ian Milne and Simon Davies led the deal from Spectrum.

Based in Southampton, London, and Marlow, Benefex is a leading provider of online employee reward and benefit schemes.  Benefex enables large organisations to tailor its rewards and benefit packages to individual employees, communicate effectively online with staff, and outsource administration and support of its schemes.  From start-up in 2003 Benefex has grown to become one of the largest online employee reward and benefits providers in the UK, currently employing 73 staff. 

The market in which Benefex operates is enjoying rapid growth.  Many employers are looking at how best to attract, retain and motivate their staff and recognise the value of flexible rewards and benefits packages that can be tailored to the needs of the individual.  These arrangements are often complex, particularly for large companies, which is driving demand for outsourced services.  Service providers such as Benefex which offer technological support are outperforming the market as the use of online and intranet services are increasingly demanded by clients.  Imminent changes in legislation are also driving new growth opportunities with the introduction in October 2012 of pension auto-enrolment in the UK, generating an increased need for online services and support.

Recognising that the business had reached the point where external capital was required to take it to the next level and to capitalise on new growth opportunities, Benefex approached Spectrum to advise and support them in attracting a development capital investor.  Working closely with Matt Waller, Chief Executive Officer and Giles Elliott, who had been brought in as Chief Financial Officer to help position Benefex for the fundraising, Spectrum conducted an extensive business analysis, planning and presentation exercise generating considerable interest from a number of private equity investors in a competitive process.  Spectrum’s knowledge of private equity and extensive contacts allied to a strong track record in raising capital were key factors in their involvement and in the successful conclusion of the project.

Matt Waller, the CEO at Benefex and the first entrepreneur to be backed by the BGF, commented:
“We were extremely pleased with the service received from Spectrum and for their support through every step of the process.  Having grown the business from start-up it was critical for us to find the right partner to move forward with.  Key to this was Spectrum’s deep knowledge of the private equity markets and their ability to introduce us to a number of potential investors who quickly understood the business, shared our enthusiasm and ambition for the market opportunity, and could readily work alongside our team to add value in the years to come.  The BGF investment was secured on very competitive terms and will enable Benefex to continue the development of innovative products and services, expand our service lines, and extend our international footprint.  We are excited to have the BGF as an investor in Benefex and very grateful to Spectrum for making this happen.”

Ian Milne, partner at Spectrum Corporate Finance, said:
“We were delighted to be able to introduce the BGF to the team at Benefex and to work with them on their first investment.  Our involvement in this project highlights the diverse range of services that Spectrum is able to provide and how we can apply our skills and knowledge across many business types and industry sectors.  Benefex operates in a dynamic sector with a market leading proposition and is led by an entrepreneurial and innovative management team.  The new investment by BGF will enable the business to capitalise on exciting development opportunities in both the UK and overseas and so continue its impressive record of growth and new job creation.”

Paul Oldham, BGF regional director for the South West and Wales, commented:
“We were very grateful to Spectrum for the introduction to Benefex and the key part they played in bringing the investment to a timely and successful conclusion.  We look forward to working with the team at Benefex to create the world’s leading provider of online employee rewards and benefits.  This is the first of many investments that we will be making in fast growing UK businesses and we also look forward to working with the team at Spectrum on other opportunities.”

Simon Davies, partner at Spectrum added:
“In a market where Bank debt is increasingly difficult to raise, growing businesses will need to look to other sources of funding to fuel that growth.  The BGF’s arrival as a major player in this market is timely, and we can foresee many entrepreneurial businesses looking to unlock their potential and move their businesses on to a different level, through development capital.”