Foresight and Octopus back £7.5 million buy-out of Diagnos

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26 February 2009 - Foresight Group (“Foresight”), a leading alternative asset manager, announced today that it has led a £7.5 million management buy out of Limited (“Diagnos”), a software engineering company focused on the automotive sector. Foresight has committed £3.75 million of equity to the transaction, alongside £3 million of flexible debt financing from Octopus Investments, via its Breathing Space™ product. The management team has also invested in the deal. 

Founded in 1999, Diagnos develops and sells sophisticated automotive diagnostic software and hardware that enables independent mechanics, dealerships and garages to service and repair vehicles.  As cars have become increasingly sophisticated and more reliant on electronic systems, mechanics need to be able to ‘talk’ to the computer running the process or system, which in turn requires a diagnostic tool.  Diagnos’ products are sold throughout the UK, which accounts for the core of its business, Europe, and the US.

Diagnos’ first product, Autologic, was released in January 2001 to provide an alternative to Land Rover’s own diagnostic tool and further products have since been developed with BMW (2002), Mercedes (2003), Jaguar (2004), Volvo (2006), and VAG (VW, Audi, Skoda) and Porsche (2007).  Further products are planned for release in 2009 with major French marques including Peugeot, Citroen and Renault.  After the OEMs (Original Equipment Manufacturer), Diagnos offers the most complete set of diagnostic tools available on the market.  

The company is based in Oxfordshire, England and currently employs 57 staff.  The management team is led by Ian Jones (Technical and Operations Director), an existing shareholder of Diagnos who has been at the company since 2001 and has personally developed or overseen the development of all the company’s products.  He will be joined by
Peter Toland (Managing Director and Sales Director), formerly a Senior VP at Launch Group a competing automotive diagnostic provider, and Kevin Finn (Chairman), founder and CEO of National Service Network, the UK’s largest network of independent garages, responsible for 1000 independent mechanical repair garages and 600 body shops.

Chris Price, Investment Director on Foresight’s MBO team, commented: “The global market for diagnostic units has increased dramatically over the last decade as cars have become increasingly reliant on complex electronics to function. Diagnos has established a market leading position and has a range of proven products with an OEM level of software coverage and reliability, a user friendly interface and high levels of technical support and after sales service.  We believe that Diagnos has significant growth potential, driven by a strong management team whose wealth of experience and contacts in the automotive industry will be key to the future development of the business.”

He added: “Partnering with Octopus on this deal enabled us to make use of its unique interest-only ‘Breathing Space’ product which is highly suited to Diagnos’ funding needs and something that is not available via other lenders in the current market.  Having invested alongside Octopus in the past, we are confident it is the right partner for the deal, and will be able to provide long term funding support for the company.”

Ian Jones from Diagnos said: “The support from Foresight and Octopus will allow Diagnos to reinforce its position as the provider of the most comprehensive diagnostic solutions on the market, behind car manufacturers’ own systems, and to continue to increase the scope of the business, both geographically and through the range of products.  These are exciting times for Diagnos.  With the support of our investors we have an opportunity to build on our success to date, and to significantly strengthen our position as a market leader in the automotive diagnostics space.”

Chris Price led the deal for Foresight Group, while Stuart Nicol and Matt Setchell completed the deal on behalf of Octopus Investments.