Robert Cherun and Erik Mikkelsen, Managing Partners of Auxo Management, pose for a portrait at the company offices at The MARS building in Toronto.Deborah Baic/The Globe and Mail
The Canadian search fund business has hit a new milestone – the first exit.
After fielding many buyout offers for their Canadian security company, the fund managers at Auxo Management LP instead decided on a recap and sale of a minority stake in portfolio company UCIT Online Security.
Auxo is one of a number of search funds in Canada. The funds are a different model of private equity, in which the investors focus on a smaller number of companies and get more deeply involved in management than in a more traditional private equity model. (Read more about the growing phenomenon here.) There was significant interest in UCIT from U.S. private equity funds, Auxo founder Erik Mikkelsen said in an e-mail. However, the recap allowed most of the investors who had backed Auxo to remain involved with Auxo, putting in money at a new, higher valuation. New York-based private equity firm Egis Capital Partners came in to buy a minority stake.
Egis is a specialist in growth companies in security, and UCIT (pronounced "you see it") fits that bill. It provides round-the-clock video monitoring, as well as selling and installing security gear and providing remote concierge services. Auxo invested in UCIT in April, 2011, and since then it has tripled its office count and more than doubled its employee base to 130.
Clients are in businesses such as condominium management, warehousing, and shopping mall management.
Blake Cassels & Graydon LLP in Toronto and Perkins Coie LLP in Palo Alto advised Auxo. DLA Piper in New York advised Egis.