LONDON, UK: Hawkwing plc has provided Internet Fusion Group Limited with a secured loan of £13.7 million to fund two acquisitions and the associated transaction costs of these acquisitions.
Northcore is an outdoor surf accessories and lifestyle clothing brand which generated revenue of £2.2 million (unaudited) and EBITDA of £0.4 million (unaudited) for the year ended 30 April 2021. Northcore offers a comprehensive range of surfing, watersports, adventure and outdoor lifestyle products which aligns closely with IFG’s Surfdome brand.
IFG has paid an initial consideration of £2.25 million, on a debt and cash free basis. There is a conditional earnout of up to £1.75 million which depends on the future trading performance (the “Northcore Earnout”). IFG expects that the Northcore Earnout will be largely self-funding.
Shade Station is one of the UK’s largest independent online retailers of sunglasses (also selling prescription glasses and watches), and generated revenue of £14.5 million (unaudited) and EBITDA of £2.3 million (unaudited) for the year ended 30 April 2021. IFG has paid an initial consideration of £10.0 million, on a debt and cash free basis. There is a conditional earnout of up to £5.0 million, depending on the future trading performance (the “Shade Station Earnout”). IFG expects that the Shade Station Earnout will be largely self-funding.
Terms of the IFG Loan
If the proposed acquisition of IFG by Hawkwing does not take place on or prior to 31 March 2022, the IFG Loan will carry an 8% per annum interest rate from the date of drawdown and is for a three-year term. The IFG Loan also carries a redemption premium depending on when the IFG Loan is repaid. The IFG Loan is secured against the assets of the acquired businesses.
Additional investment into IFG
Funds managed by Marshall Wace have made a direct investment into IFG of £6.0 million at an enterprise value of £115 million. This investment will provide IFG with additional capital to support its growth plans.
Keith Sadler, Senior Independent Non-Executive Director of Hawkwing, commented: “We are delighted to support IFG in its buy-and-build strategy and on its acquisition of Northcore and Shade Station, two businesses that expand and enhance IFG’s suite of well-respected speciality e-commerce businesses. As IFG continues to expand, the investment from Marshall Wace is another strong endorsement of its business quality, its management team and their growth strategy. Our proposed acquisition of IFG continues to progress and we look forward to updating the market in due course.”
John Browett, Executive Chairman of the Management Board of Internet Fusion Group, said: “These acquisitions represent another significant step in the execution of our buy-and-build strategy. We have a compelling track record of acquiring profitable specialty retailers and transforming their performance and growth prospects through our Reactor platform, and we look forward to accelerating the future performance of Northcore and Shade Station. Both are fantastic businesses which offer authentic online retail experiences for people browsing for high-quality products from like-minded brands. Separately, the investments in our business by Hawkwing and Marshall Wace demonstrate strong investor confidence in our model, and I am excited by the momentum we continue to build in the market.”
Internet Fusion Group (IFG) is an ecommerce aggregator using its technology platform to change the economics of speciality e-retail. It brings together specialised retail businesses and brands onto its own proprietary end-to-end digital platform, ‘Reactor’. Reactor enables specialised retail businesses to unlock efficiencies of scale while preserving a differentiated and authentic customer experience.
Internet Fusion Group (IFG) already owns and profitably operates nine speciality e-commerce websites that are specialists in their niches. Each of these websites aims to dominate their niche markets through a focus on content, community and authenticity. IFG can keep costs of running its websites low by operating them through its Reactor platform with limited need to licence any material additional software.
With a deep understanding of the dynamics of niche brands, IFG has successfully acquired and integrated seven businesses demonstrating a strong track record of acquiring niche e-retailers at attractive multiples and transforming their profitability through its Reactor platform.
Internet Fusion Group (IFG) is also at the early stages of offering its Reactor platform as a service to supplier brands looking to scale their Direct-to-Consumer offerings – giving them low-cost access to all the benefits of a bespoke seamless online retail business engine, and the agile warehousing and delivery systems required to support it. In April 2021, IFG launched its first customer on the Reactor Platform and has a pipeline for further launches in 2021 and 2022.