We are pleased to announce the Stanhope Entrepreneurs Fund’s (“SEF”, the “Fund”) first investment. The SEF is the lead investor in a c.£70 million capital raise into S4 Capital plc (“S4”, the “Company”), the new era digital multi-national advertising and marketing services business established by Sir Martin Sorrell earlier this year. The capital was raised by S4 to fund the acquisition of MightyHive, Inc. (“MightyHive”) for a total consideration of $150 million. MightyHive is a San Francisco-based market-leading programmatic solutions provider for forward- thinking marketers and agencies. This transaction follows S4’s acquisition of MediaMonks for €300 million in July and furthers the Company’s strategy of combining award-winning creative production with digital media planning and primary data analytics.
In addition to its acquisition of MightyHive, S4 has announced today that the Stanhope Entrepreneurs Fund will become a strategic partner and that Daniel Pinto, Founding Partner and CEO of Stanhope Capital, will be joining its board.
The special purpose vehicle set-up by the SEF for the purpose of this investment is managed by the SEF GP and will invest approximately £30 million in S4 Capital for a stake of approximately 8% in the Company. Of the £30 million committed, £20 million come from the SEF and its anchor investors and £10m from co-investors.
MediaMonks and MightyHive have achieved a combined revenue compound growth of approximately 57% per annum since December 2015 and an EBITDA compounded growth rate of 77% per annum in the same period. In the last twelve months the combined companies had revenues of c.£128 million and EBITDA of c.£24 million.
This transaction is perfectly aligned with the objectives of the Fund, which is seeking to back proven management teams in fast growing and disruptive businesses across Europe. Sir Martin Sorrell, the Executive Chairman of S4, has an exceptional track record in the sector, having led WPP plc from a £1m business in 1985 to a market capitalisation in excess of £15bn when he left in 2018. Furthermore, the management teams of MediaMonks and MightyHive have built businesses which have grown at an excellent pace into leaders of their market. The combination of Sir Martin’s access to the largest corporate accounts in the world with the tech savvy marketing approach of the founders of MediaMonks and MightyHive should result in significant growth in the next few years for the Company. Collectively, the senior management team of S4 will own 41% of the Company. S4 is a disruptive business looking to change the way firms interact with advertising, marketing firms and service providers, able to capitalise on the status quo evidenced by the shifts in brand and marketer approaches.
Sir Martin Sorrell, Executive Chairman of the Group, commented:
“S4 Capital intends to provide global, multi-national, regional, local clients and influencer-driven millennial brands with new age/new era digital marketing services concentrated in three key areas initially – the development of a global digital content platform; first-party data fuelling both digital media planning and creative ideas; and, finally, digital media buying. Clients of all kinds want these services delivered faster, better and cheaper, by more agile and responsive organisations, either in-house, co-located with them or alone. To this end, S4 Capital will be organised primarily on a unitary basis, with key people continuing to be incentivised through significant, equity ownership in the enterprise as a whole. S4 Capital believes that this strategy and structure will deliver significant long-term value for share owners, particularly through organic growth, supported by strategically-focussed acquisitions.
Stanhope Capital’s strategic investment is an excellent validation of our long term strategy and we welcome the input of our new directors Victor, Wes, Pete, Chris, Peter and Daniel on the Board, to complement that of Paul, Rupert and Sue.”