Avoca Capital made €20.1 million profit in year before sale to KKR

Irish investment group Avoca Capital made a pre-tax profit of €20.1 million last year, its last full year of trading before it was acquired by US private equity giant KKR. This compared with a surplus of €3.2 million in the previous year.

The company’s turnover rose by 65 per cent in the year to €45.6 million while its administrative expenses increased by just 8.6 per cent to €26.4 million. This resulted in a sharp increase in operating profit to €19.2 million from €3.3 million in 2012.

Other income pushed its profit to above €20 million with the company paying €2.3 million in corporation tax.

Avoca Capital is a holding company and parent of two Jersey-based registered companies, Avoca Capital Jersey Unlimited and Pacova Ltd, and of three Irish unlimited companies – Avoca Capital Holdings (ACH), Avoca Securities Investments and Avoca Capital Property.

ACH manages 18 funds with assets of about €6 billion. It posted a pre-tax profit of €17.2 million last year, the accounts show.

Cleared by regulators

Last October, KKR announced its intention to acquire Avoca, with the deal cleared by regulators in Ireland and Britain in February. The sum paid was not disclosed although these accounts indicate that a mix of cash and shares in KKR were used in the deal.

A number of post-balance sheet transactions are detailed in the accounts. These include the redemption of 71.8 million shares in Avoca Capital Group owned by its major shareholders, Donal Daly and Alan Burke, alongside dividend payments for a total of €2.7 million.

As part of the sale, Avoca shares were transferred to KKR Irish Holdings SPC Ltd.

‘Significant opportunity’

Avoca’s accounts state that the transaction creates a “significant opportunity” for KKR in the European credit space and would enable it to expand its “credit platform to offer a full spectrum of credit opportunities globally to clients. The transactions will create a broad-based credit business that will be at the forefront of developments in European credit markets in the years to come,” the directors report states.

“Avoca Capital Group is very excited by the enhanced opportunities the transaction will bring for the Avoca team and its clients”.

The directors said the sale to KKR would ensure Avoca has a large institutional base to help grow and expand its business.

No comment on the accounts was available yesterday from Avoca, which has 42 staff in Dublin and 25 in London.