November 25, 2010 / 1:27 PM / in 8 years

Oakley Capital buys into Time Out for online growth

LONDON (Reuters) - Investment firm Oakley Capital has bought a 50 percent stake in magazine and travel guide publisher Time Out, attracted by the potential to exploit its strong brand online.

The deal values Time Out at more than 20 million pounds ($32 million), its founder Tony Elliot told Reuters on Thursday.

“There is incoming money into the business that has dealt with debt. It’s dealt with working capital, it’s dealt with various costs and I have some money,” he said.

“We (now) have absolutely no debt,” he added.

In January, Elliot injected 3 million pounds of his own money to reduce Time Out’s bank debt of 8.3 million pounds.

Elliot, who founded the firm with 70 pounds in 1968, had been looking for an investor for years but resisted becoming part of a bigger media group. He will continue to own the other half of the company.

“We are more profitable this year than we have ever been, and going forward the sky is now the limit on what we can achieve,” Elliot told Reuters in a telephone interview.

Time Out, whose first issue 42 years ago consisted of a single sheet of paper covering cultural life in London, publishes magazines and travel guides in more than 30 countries. It is the official travel guide publisher for the London 2012 Olympics.

Oakley director Peter Dubens told Reuters the investment firm planned to develop Time Out’s digital potential.

“We are going to help the business which has not had a lot of working capital over the last few years to create a very large presence digitally, both mobile and on the Internet,” he said in an interview.

The founders of the rival Lonely Planet guides sold most of their company to BBC Worldwide in 2007, also with the aim of expanding across media platforms.

“There are many cities it is not in, and the other thing that will happen will be expansion, both more depth in cities it is already in, and in further cities all over the world,” Dubens said, declining to say how much his firm had paid for the stake.

Liberum Capital analyst Henry Freeman, who has a ‘buy’ rating on Oakley Capital agreed there was potential to exploit the Time Out brand.

“The new portfolio company’s significant brand value can be leveraged further,” he said in a note. “Growth will also be driven by further roll-outs in major world cities.”

AIM-listed Oakley, whose private equity fund also has investments in companies such as acquisitive telecoms reseller Daisy Group and derivatives broker Monument Securities, told Reuters in August it was looking for Internet and financial services-related opportunities.

Oakley said in September it was selling cloud computing firm Host Europe for 222 million pounds, earning a return of about three times its initial equity investment.

(Reporting by Brenda Goh; Editing by Paul Hoskins and Matthew Jones)

$1 = 0.6345 pound

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