Carlyle Group acquires stake in The Foundry

The Carlyle Group announced that it has acquired a significant majority stake in The Foundry, from Advent Venture Partners and other stakeholders. What does this mean for facilities and artists using the Foundry’s software? In an fxguide exclusive, Mike Seymour caught up with Foundry CEO Bill Collis to get the scoop.


Mike Seymour: Let me ask you a couple of blunt questions just so that we can put to bed any concerns that anyone might have. This isn’t a fire sale. You didn’t have to be sold because of some economic crisis or problem inside the company.

Bill Collis: No, not at all. I mean, the company is performing better than ever, growing faster than ever. We’ve always been profitable ever since Bruno (Nicoletti) and Simon (Robinson) set it up in ’96.


Mike Seymour: In fact, the company has, sort of, tripled in size in the last few years, hasn’t it?

Bill Collis: I think we’re up to about 120 employees today. Or getting very close to that.


Mike Seymour: So tell us, who is the new majority equity shareholder in The Foundry? Who’s bought you?

Bill Collis: It’s the Carlyle Group, one of the world’s largest, if not the largest, private equity company. Who obviously specialize, well they make a huge number of investments. The particular fund that is invested in us specializes in investing in growth technology companies within Europe.


Mike Seymour: And this private equity is actually, probably, the most stable sort of finance currently in the global financial community. In fact, private equity like this is a very stable way for you to go isn’t it?

Bill Collis: Yeah, it’s really good. I guess it’s an interesting argument as to what is the most stable, when some people argue that being public is more stable. But I guess if you’re being public you tend to be driven by quarterly results. Where as being held by a private equity firm with a long term five year outlook is really a great result for us. Because that’s now the sort of length of time we now want to look growing and developing The Foundry over.


Mike Seymour: You’re not in a situation where, well let’s put it this way: the group that now owns you is not, in want of a better analogy, an active company in this area that you’re sort of merging with other divisions. You’ll remain a separate entity?

Bill Collis: Absolutely, I mean we’ll remain completely independent as an organization. Same management running us. Obviously they’re providing the money, providing their knowledge how to grow software companies, which they’ve done a number. I don’t think they’ve done any software companies in our field at all, but they have got the experience of other software companies.


Mike Seymour: Right, so this…is a financial structuring to what we know as The Foundry.

Bill Collis: Yeah, exactly. As an organization we’re going to carry on doing exactly what we have been doing. We’re intending to grow, carry on recruiting more people, stick with the same products, have new products over time, same management team, everything carries on as it has been for the last few years.


Mike Seymour: And does that management team have a financial interest in the company? Is there a direct involvement at an ownership level?

Bill Collis: Absolutely. Obviously when we did the management buy-out, the management invested heavily, all the management is still invested. One of the things I’ve always liked about The Foundry, and whilst I’ve been CO, is that we make as many of the staff shareholders as possible, and that was something that happened post-NBO and is continuing through Carlyle’s ownership as well.


Mike Seymour: So, you and the guys haven’t just cashed in your chips and are looking for cheap condos in Switzerland?

Bill Collis: No, we’re still very much here in SoHo and intend to remain so.


Mike Seymour: So what does this mean to a customer, be it big or small, of some of your Foundry products? I mean, if I’m a Nuke operation with twenty seats, do I notice any difference?

Bill Collis: I don’t think you’ll notice any difference at all in the short term. I hope in the longer term you’ll begin to see more products, more development, more exciting things happening at The Foundry. But, yeah, short term wise it’s exactly the same people, same teams, we’re all just carrying on.


Mike Seymour: And there’s no reporting shift. Because, even though Carlyle is enormous, you’re under the European Technology Partners wing, so it’s not as if you’re suddenly , sort of culturally, reporting in to an American operation or, I don’t know, Saudi or Asian operation. There’s no sort of fundamental change there in culture is there?

Bill Collis: No, no change at all. I mean obviously all shareholders need good reporting, but we’re very used to that with our previous shareholder, Advent, who required very large monthly and quarterly reporting packs. And Carlyle will require the same, but we’re used to it. It’s what we do.


Mike Seymour: Some of us would be hoping that this may mean that you can expand what The Foundry’s up too in kind of a sensible, controlled fashion. Is this part of an expansion plan?

Bill Collis: Yeah, historically we’ve always grown organically at The Foundry. It’s what we’re very comfortable with doing and you know we’ve done various technology sharing agreements with people like Weta and Imageworks, Mari and Katana. We very much like like that type of expansion, partnering with studios. We hope to do more of that. I guess the nice thing about Carlyle is they have very large funds that are keen to deploy their money so if the opportunity came to make acquisitions, they’re absolutely up for that and want to back us to do that. Nothing’s in the cards at the moment at all though, and historically it’s not how we’ve grown. But if that opportunity arises going forwards we’ve now got the financial backing to do that.


Mike Seymour: Post industry is a hard industry. Do you think there’s room for growth?

Bill Collis: Oh yeah, absolutely. Obviously we’ve grown over the last two or three years, as most people know, I still think there’s a lot of room for us to grow, both with our existing products and with new products.


Mike Seymour: We’re pretty much exclusively talking to you about this…this is not something that The Foundry is really pushing. And I take from what you’ve said, the reason for that is that, as far as you’re concerned, this is a stabilizing move and doesn’t require any kind of major announcement. Is that the reason why you’re not sticking this all over popular news outlets?

Bill Collis: Yeah, from our point of view it’s very much business as usual. The financial community are definitely getting excited about it because, clearly Carlyle is a big name, and whenever they make investments people watch that. As far as day to day operations go at The Foundry, very little has changed. I’m sitting looking at the engineering teams at the moment, and they’ve been doing what they’ve done for the last few months and they’re carrying on doing it at the moment. Very little has changed.



The full press release from The Carlye group


London, 15th March, 2011: Global alternative asset manager The Carlyle Group (“Carlyle”) announced today that it has acquired a significant majority stake in The Foundry Visionmongers Ltd (“The Foundry”), a developer of visual effects (VFX) software, from Advent Venture Partners (“Advent”) and other stakeholders. Falcon Investment Advisors, LLC (“Falcon”) has converted its current ownership in The Foundry into mezzanine notes in support of the acquisition. The founders and management will continue to retain a significant minority stake and drive the continued growth and customer-focused innovation that the Company has consistently delivered. Financial terms of the transaction were not disclosed.

Headquartered in London with more than 100 employees, The Foundry has established itself as a critical technology partner to the major feature film studios and post production houses in the US and UK. The Foundry’s products have been used to make recent “must see” movies including Avatar, Tron: Legacy, Alice in Wonderland, The King’s Speech, 127 Hours and Black Swan – all award winners or nominees.

Carlyle will support The Foundry’s expansion and invest to develop their specialized product offerings. Furthermore, this investment will facilitate the company’s diversification into other adjacent market arenas as the product range continues to evolve and grow.

Commenting on the transaction, Dr. Bill Collis, CEO of The Foundry said, “Carlyle’s financial strength, extensive network, and track record in the management of software companies are great assets to our business. We’re exceptionally proud of our achievements over the past two years and have benefited significantly from the deep insight and timely guidance provided by Advent. We look forward to partnering with Carlyle and seeking new opportunities in current and new markets as we continue to progress and innovate.”

Michael Wand, managing director and co-head of Carlyle’s European Technology Partners team (CETP), said, “We have been impressed by the high quality of the products and talented management team, and are confident in the excellent growth potential of The Foundry. Carlyle is delighted to be partnering with The Foundry to support the next phase of growth consisting of further international expansion, ongoing product diversification and broadening the application scope for VFX technologies, whilst sustaining its focus on innovation and customer satisfaction.”

Since the management buyout of the Company in June 2009, the management team and founders have worked closely with Advent and Falcon to transform the Company from a best-of-breed plug-in developer to the leading industry VFX software provider through a combination of unique product partnerships, sales execution, channel development and global expansion. During this period, headcount tripled from 35 to more than 100 and growth accelerated, with revenue increasing from £6.1 million to £14.9 million in 2010. The Company expanded its now 4,000-strong customer base to include The Moving Picture Company (MPC), Prime Focus, Dreamworks, Industrial Light and Magic (ILM), Framestore, Cinesite, Double Negative and several other high-end facilities.

Mike Chalfen, General Partner at Advent Venture Partners, commented, “This transaction highlights the high quality growth equity opportunities available in European tech. The Foundry has become the global leader in its market, produced phenomenal revenue and profit growth, and executed ambitious product acquisition and channel development plans. To exceed expectations on all these dimensions required a clear view of where value would be created, and a strong leadership team to sustain tremendous commitment throughout the organisation.”
Equity for this investment will come from Carlyle Europe Technology Partners (CETP) II, a €530 million fund that closed in November 2008. Since 2002, Carlyle’s European Technology team has acquired and invested in 20 companies, supporting their growth, expansion and business transformation initiatives in the technology space.

1 thought on “Carlyle Group acquires stake in The Foundry”

  1. The C.Group are in everything from weapons to oil to banking, finance, guess they’re gunning for the whole pie . .

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