Business Growth Fund (BGF) backs software and infrastructure solutions provider in its bid to acquire Kypera Holdings

BGF has invested £2m in Castleton Technology plc, the software and managed services provider to the public and not-for-profit sectors, to support the acquisition of Kypera Holdings Limited and Castleton’s longer term growth strategy.

At the same time, the Group’s existing investor MXC Capital has invested £1.5m while Barclays has extended it bank facilities by a further £1m.

Castleton provides tailor made software and infrastructure solutions, predominately in the social housing sector. Nearly a third of all the social housing associations in the UK are now Castleton customers.

The business has made seven acquisitions in the last two years, buying complementary businesses focused on the social housing sector – Montal, Documotive, Keylogic, Opus, Impact, Brixx and Kypera.

The acquisition of Kypera – a provider of integrated housing management and finance software – will provide a software platform to Castleton’s multiple service lines to create the only integrated, single Enterprise Resource Planning (“ERP”) platform solution in the social housing sector, as well as bringing an international presence to Castleton’s operation

BGF’s co-investment with MXC Capital, along with the additional bank facilities, will allow the Group to continue to take advantage of growth opportunities available to it including, possibly, acquisitions of other businesses.

The investment has been made by BGF Quoted, BGF’s specialist team focused on listed businesses. Previous investments in AIM-listed companies include Kidderminster-based Victoria plc [LSE: VCP] and Styles & Wood, [LSE: STY] headquartered in Greater Manchester.

Ian Smith, chief executive of Castleton said: “This is a critical acquisition for us. Kypera adds a whole new level to Castleton’s offer. We are now the only integrated, single ERP platform solution able to meet every aspect of our customers’ needs – the only one stop shop serving the sector.

“We are pleased to have BGF Quoted on board as a strategic long-term partner, whose funding will allow us to unlock further growth in the business.”

Gurinder Sunner, BGF, added: “Castleton’s management team has demonstrated its ability to execute an acquisitive and organic growth strategy. We are delighted to be supporting them as strengthen their offering even further with the integration of Kypera and to make our first co-investment alongside MXC.”

The investment was led by Gurinder Sunner, Paul Brindley and Tom Jenkins for BGF Quoted.