KKR swoops on AIM construction software firm for £208m

Private equity giant KKR has acquired construction software company Eleco for £207.6 million, as part of a surge of takeovers on the London Stock Exchange this year. The deal, secured in partnership with venture capital firm Accel, received approval from Eleco's board. Shareholders stand to gain a significant 235p per share, equating to a 74.7% premium over the previous trading session's closing price.

Eleco's shares, listed on London's junior stock market, have experienced volatility over the past year, dipping to a low of 105p before settling at 134p on Wednesday, marking an 18% decline over the year. Investors holding 45.2% of Eleco's shares have already expressed support for the acquisition, with the transaction expected to conclude by early 2027, pending court approvals.

Eleco's revenue grew by 8% to £19.9 million in July, propelled by a 14% increase in recurring subscription and software maintenance income to £16.9 million. The company specializes in software and related services for niche markets within the architectural, engineering, and construction industries, such as timber frame and staircase manufacturing.

Subscription sales constitute 85% of its total revenue, contributing to a record £35.5 million in recurring revenue. This acquisition comes amid a wave of UK M&A activity, totaling $132.5 billion as of September 1, nearly triple the $48.2 billion recorded in the same period last year. Several London-listed firms recently accepted foreign bids, prompting calls for regulatory intervention.

Notable acquisitions included Bodycote and Gamma Communications for over £3 billion, along with energy firm Capricorn.