- UK digital ad firm Croud is working with investment bank GP Bullhound to seek new PE funding.
- The hunt comes five years after PE firm LDC took a stake in the company.
- Croud also secured a roughly $42 million bank loan this month.
UK digital marketing firm The Croud Group is working with the investment bank GP Bullhound to search for a new private-equity investor, according to multiple sources familiar with the matter.
Croud is already PE-backed, having taken on a 30 million pound, or around $28 million, minority investment from LDC in 2019. GP Bullhound acted as a financial advisor to Croud on that transaction, too. GP Bullhound declined to comment.
Croud didn't comment specifically on its search for new PE financing, but the company's global CEO Luke Smith said in a statement to Business Insider that it had ambitious growth plans for the future.
This month, Croud also secured a roughly $42 million club loan led by OakNorth Partners and HSBC, Campaign reported.
"The recent OakNorth and HSBC refinancing supports our ongoing approach and plans to scale through strategic acquisitions," Smith said in the statement. "We continue to expand our market-leading service offering for our clients, completing three key acquisitions over the last couple of years."
Founded in the UK in 2011 by former Googler Luke Smith and Ben Knight, who led search at the marketing agency Harvest Digital, Croud offers services like programmatic media buying, search engine optimization, visual production, and paid social advertising.
The company has around 500 full-time staff and has worked with clients such as Nespresso, Ford Europe, and Guinness. Croud says it also has access to a wider network of 2,400 freelance specialists.
Croud is part of a new wave of PE-backed digital challenger businesses to the traditional advertising holding companies. Its close competitor set includes Brainlabs, Tinuiti, and Dept.
"Croud have flourished by sticking to the knitting of performance media," said Greg Paull, principal at marketing consultancy R3. "That dedicated specialization is not something really found at the holding companies and it's allowed them to penetrate clients frustrated by that."
But unlike some of its closest competitors, Croud hasn't been particularly acquisitive since it took on LDC's investment in 2019. In that time, it's expanded from the UK and US to Dubai, and acquired the social-media firm Born Social, analytics company Impakt Advisors, and the luxury-focused marketing agency VERB.
PE backers in the marketing space tend to hold on to their investments for 4.6 years on average, according to a March report from the advisory firm SI Partners. The report, which analyzed 60 digital and marketing services companies that had collectively taken around $32.5 billion in PE investment since 2010, listed Croud as "ripe" for an exit this year.
"The valuation expectations would have been very high for Croud," Rosie McKeith, SI Partners director, told Business Insider. "The fact that they have chosen to use bank debt for the next stage of their growth suggests to me they might do something in the not-too-distant future."
Croud could, for example, take its recent loan from OakNorth and HSBC to help fund an acquisition to further expand its presence in the US, McKeith said.
"They have been growing in the US, but it's probably part of the business that could be scaled further," she added.
OakNorth said earlier this month that Croud was actively looking to accelerate its M&A plans and that the company had already achieved an almost 40% annual growth rate over the past three years.