Founder's fortune from sale of Lumison majority share

One of Scotland's longest-established internet businesses has been snapped up by a private equity firm as a springboard for an acquisition spree in the fast-growing IT services sector.

• Lumison founder and chief executive Aydin Kurt-Elli has sold a majority share to private equity firm BDC Picture: Norman Wilson

It is understood that chief executive and founder of Lumison, Aydin Kurt-Elli, and his family, will have made a substantial six-figure sum from selling a majority stake for an undisclosed sum to London-based Bridgepoint Development Capital (BDC).

Kurt-Elli, 37, named young business leader of the year in the Scottish Leadership Awards last month, said: "We now have the firepower available to expand and accelerate the range of services we can offer thanks to this timely and strategically important development for our business."

Lumison, which turns over more than 7 million, employs about 50 people at its base in Leith, near the Scottish Government offices. It boasts some 2,500 clients in the UK including drinks groups Drambuie and Caledonian Brewery and education IT company RM.

Kurt-Elli will remain as chief executive of the company he started up as EdNet when in his early-20s in 1995. He told The Scotsman that, although he was selling down his majority 60 per cent holding, he would retain "a substantial minority stake". He and his family are reinvesting part of the proceeds in the new business.

"Existing investors have done well and we are all very pleased with the transaction," Kurt-Elli said.

Lumison acts as the outsourced partner for managing clients' IT infrastructure, hosting key hardware in secure physical facilities and providing network managed services that allow clients to connect securely to the internet and other locations.

BDC, part of the Bridgepoint international private equity group, said it saw Lumison as "a first step" in building a larger IT services group focused on serving the small and medium-sized business market.

BDC said Mark Howling, formerly a senior executive with Computacenter, will become executive chairman of Lumison and would "work with the existing management team to grow the business both organically and by serial acquisition".

Kurt-Elli added: "Our growth so far has been organic, a sort of bootstrap business. Every penny we have earned we have invested back in the business. But it is different when you start looking for inorganic growth (acquisitions].

"Then you need substantial chunks of capital.BDC are unequivocal that they have a buy and build strategy, and we will be a good springboard for that."

He said while Howling would also help on Lumison's existing business, it was envisaged the new man would spend the majority of his time on acquisition strategy.

Alan Payne, a BDC partner, said the group was acquiring "an already highly-regarded, profitable company" that it could add to "through selective acquisition".

Howling said: "There are very few medium-sized service providers capable of offering clients one trusted partner to meet all of their IT and networking needs which is what customers say they want. The acquisition of Lumison gives us a real opportunity to build such a player."

The Scots firm has achieved double-digit growth in turnover and profit over the past three years. Last year it made a profit of 1.2m on turnover of 7.6m.

Debt funding for the transaction is being provided by HSBC.