LONDON, September 27, 2010 /PRNewswire/ -- XLN Telecom Ltd (XLN) - the UK's leading provider of telecoms services for small business - is pleased to announce that ECI Partners (ECI), one of the UK's leading mid-cap private equity groups, has today taken a majority holding in the Company. The investment is accompanied by a significant commitment by ECI to support XLN's ongoing business development and acquisition programme. As a result, XLN will have the funds available to more than double the size of the business through acquisitions. XLN's award winning management team, led by founder and Group CEO, Christian Nellemann, will continue to lead the business following the transaction.

Founded in 2002, XLN specialises in providing small businesses in the UK with high quality, low-cost fixed-line, mobile and internet services. In the last three years, XLN's revenues have grown substantially from GBP27 million in 2006/2007 to over GBP54 million in 2009/2010. In the last year, the company successfully acquired and integrated One Bill into its operations.

Key drivers in XLN's growth have been the management team's successful development of an industry leading proprietary technology platform that allows new services to be smoothly integrated into the business, combined with the management team's highly focused approach to marketing, product development and customer service innovation. Today, the company has over 115,000 business customers across Britain, XLN now operating two non-competing brands in the market - XLN Telecom and One Bill.

Christian Nellemann, founder and Group CEO of XLN, commented:

By taking a completely fresh approach, we have been able to transform a niche and historically overlooked sector of the market. We have been able to achieve this by combining best quality products with best value pricing and industry leading customer service standards. As a result, we now have a highly profitable and scalable business that will allow us to rapidly expand the range of services we deliver to the small business market. We are delighted that ECI will be a key part of the business's exciting next chapter given the opportunities for consolidation within our sector.

In July 2010, XLN's management team were regional winners of the best Private Equity Backed Team of the Year (mid-market) in the British Venture Capital Association Portfolio Company Management Awards (BVCA PCM Awards).

Tom Wrenn, who led the deal for ECI Partners, added:

XLN is a superb growth business in a sector that has performed strongly during the recent downturn. It is led by a high-quality management team that has a clear vision for the future. XLN has considerable scope to add more products and services and is in an excellent position to act as a platform for consolidation in the fragmented telecoms market. We are delighted to be backing this excellent team and to provide additional capital to continue to grow the business.

The deal has delivered a multiple of investment of 4.5x for Zeus, which originally backed the management buy-out of XLN in January 2008 with a GBP6.63 million investment for a majority stake in the business. Zeus then went on to support XLN's acquisition of OneBill Telecom with an additional investment of GBP2 million.

Tony Dickin, partner at Zeus Private Equity, said:

XLN has been able to take advantage of a highly fragmented sector and position itself as a market leader in the SME telecoms space. Under the leadership of CEO Christian Nellemann, XLN has experienced exceptional growth over the past two years and I wish the business all the best for the future in its partnership with ECI.

About XLN

XLN is committed to providing the lowest cost telecom services and highest customer service levels to the UK's small business community. Founded in 2002, XLN is now the UK's largest independent provider of telecom services to small businesses in Britain with over 115,000 business customers across the country. In 2007, XLN was ranked as the highest placed telco company in The Sunday Times Tech Track and was listed for a second consecutive year in 2008. In 2009, the company was a finalist in the Customer Focus Award category of the National Business Awards. In the same year, XLN achieved CarbonNeutral(R) status, making it one of the first companies in its sector to earn this certification. During 2010, XLN has won a range of awards including a Global Business Excellence Award, a Best Company Award as well as being a named finalist in the Federation of Communication Services and Fast Growth Business awards. In 2010, Christian Nellemann, founder and Group CEO was a winner of the Ernst Young Entrepreneur of the Year London South region award in the Business Services category. This follows him winning the Ernst Young Entrepreneur of the Year Award for Technology and Communication in 2006.

About ECI Partners

Originally founded in 1976 as Equity Capital for Industry, ECI is one of the longest established private equity groups in the UK. With offices in Manchester and London, and a team of 21 dedicated professionals, ECI specialises in buyouts, buy-ins and development capital deals of GBP10 million to GBP150 million. ECI is owned by its team and manages private equity funds with a capital base of over GBP880 million and has provided funds for over 250 companies. In December 2008 ECI raised ECI 9, a GBP437 million fund and ECI's ninth buyout fund. This fund exceeded the original GBP400m target in just three months with over 90% of the capital being committed by existing ECI investors. ECI's other notable investments in the Software and IT Services sector include Ascribe, Clinisys, ClarityBlue, GK Communications, Language Line, MM Group, NCC, OSI and Guardian iT.

About Zeus Private Equity

Zeus Private Equity was formed in 2005 by Gary Tipper, Ed Fazakerley and Tony Dickin. The firm's maiden fund, Zeus Private Equity Fund LP, closed in December 2007 at GBP100m.

From offices in Manchester, London and Bristol, Zeus Private Equity seeks to invest between GBP5m and GBP15m in established UK companies with an enterprise value of up to GBP50m. The investment team looks at opportunities and provides funding for MBOs, MBIs, acquisition finance, equity release and restructuring.

- Zeus Private Equity portfolio comprises:Air Energi: international recruitment business specialising in the oil and gas industry (MBO) - Electranet: specialist networking services supplier, primarily to public sector organisations (MBO) - Hallmark Hotels: UK regional 4* hotel chain (equity funding for buy and build strategy) - MJ Quinn: infrastructure services business providing electrical, mechanical and fire protection services to the London Underground and rail sector (SBO)

Contact details XLN Telecom Christian Nellemann (Group CEO), +44(0)20-7793-5533 James Wilson (Head of Marketing), +44(0)20-7793-5517 Toby Hall (gth media), +44(0)20-3103-3903 Jonathan Kinsella (gth media), +44(0)20-3103-3904 ECI Partners Piers Hooper (Equus Group), +44(0)20-7223-1100 Sam Barton (Equus Group), +44(0)20-7223-1100 Zeus Private Equity Alastair Henry/ Lauren Jones (MC2), +44(0)161-236-1352

SOURCE: XLN Telecom

CONTACT: Contact details: XLN Telecom: Christian Nellemann (Group CEO),+44(0)20-7793-5533; James Wilson (Head of Marketing), +44(0)20-7793-5517;Toby Hall (gth media), +44(0)20-3103-3903; Jonathan Kinsella (gth media),+44(0)20-3103-3904; ECI Partners: Piers Hooper (Equus Group),+44(0)20-7223-1100; Sam Barton (Equus Group), +44(0)20-7223-1100; ZeusPrivate Equity: Alastair Henry/ Lauren Jones (MC2), +44(0)161-236-1352