NCC Group has raised 38m pounds ($70.4m) in an initial public offering to list on the London Stock Exchange’s Alternative Investment Market, giving it a market capitalization of 55m pounds.
Barclays Private Equity, an original investor in Manchester, UK based NCC, remains the company’s biggest shareholder with 9.7% of the equity. The management retains approximately 21% of the shares in the placement that went solely to institutional investors. The company will use 21.4m pounds of the money raised to pay off a substantial portion of its debt, which should now stand at approximately 4.7m pounds ($8.7m).
NCC Group, which provides software escrow services as well as security testing and consultancy, grew revenue by 22.8% in 2004 to 14.5m pounds, reporting an operating profit before exceptional items and amortization of 4.8m pounds for the year ended May 31, 2004.
NCC was formed in 1999 through a management buyout of the escrow, testing and consultancy units of the National Computing Centre, a UK IT industry membership organization. Half of its revenue is generated from escrow services, whereby it holds on to application source code on the behalf of licensees in case of the licensor becoming insolvent on failing to provide pre-defined support services.
The company claims to only face competition in the UK escrow market from Intellect, another UK-based IT membership organization. It also claims that there is no significant competitor in Europe, where it has highlighted future growth prospects. Gartner Consulting quantifies the potential addressable size of the UK software escrow market at between 65m pounds ($120.5m) and 85m pounds ($158m), according to NCC.