Portfolio Updates

Takeover announced for Castleton

The recommended cash offer for Castleton (a software provider to social housing companies) from MRI Software, a US provider of software solutions to the real estate sector, has completed. The takeover came at a 43% premium to the prevailing share price and represented multiples of 3.5x and 13x historic revenues and EBITDA respectively, and a free cashflow yield of 4.8%.

The Takeover provided Kestrel with a full exit from its holding in Castleton. Click here to read our case study on this investment.

Kestrel Insight
Kestrel supported Castleton in their successful roll up strategy, acquiring six businesses in six years to build a leading position in the UK social housing sector. The benefits of this scale helped grow profit margins to an impressive 27% and EBITDA to £6.4m from a standing start. Consolidation in the sector is continuing, but the sums required to participate are unavailable to Castleton as a quoted company. Consequently, participating in the consolidation from the sell side was a logical conclusion, with the premium received reflective of the good work undertaken by the management team. We wish them and all employees of Castleton well for the future under their new owners.


Kestrel’s Portfolio Updates should neither be construed as investment research, nor the provision of investment advice, nor a recommendation. This article should be viewed as short term commentary only based on the latest economic statistics, company results or information on upcoming releases or events. It is only a brief unsubstantiated summary of Kestrel’s opinion on such information as at the date of publication and no reliance may be placed upon any contents of this article by the recipient.

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