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Visual effects software developer for Harry Potter films in management buy-out

3 Jun 2009

Advent Venture Partners, a UK venture capital firm, has led a management buy-out of The Foundry, a British visual effects software developer whose products have been used in Hollywood blockbusters including The Dark Knight, the Harry Potter franchise and Star Trek.

Advent has backed the management team, led by CEO Dr Bill Collis and the original founders, in a transaction that sees the sale of the shareholdings of previous investors, Wyndcrest Holdings, for an undisclosed sum.

The Foundry is highly profitable and has more than doubled revenues in the last 18 months to $10m. Advent’s support will permit the company to continue expanding from its London headquarters.

The Foundry’s client base includes worldwide post-production houses such as Weta Digital in Wellington, New Zealand, Framestore in London, and Sony Imageworks in Los Angeles. The company develops software for visual effects compositing, which involves layering and manipulating many image sequences to create a final shot. The Foundry has been taking a significant share from the market leader, Apple’s Shake software, since 2007, and Advent hopes it will become the industry standard over the next few years.

Nuke, one of the company’s products, was originally developed by Los Angeles post-production house Digital Domain before becoming part of The Foundry’s range in 2007. Since then, The Foundry has invested aggressively in its development, making 12 product releases.

The Foundry’s products have facilitated ambitious effects sequences on major motion pictures including The Dark Knight, the Harry Potter series, Sweeney Todd, Speed Racer, Iron Man, The Curious Case of Benjamin Button, Star Trek, Australia, Watchmen and X-Men Origins: Wolverine.

Collis, the software developer’s CEO, said, “The Foundry is renowned for responding to user need and developing useful tools that boost productivity. With the backing of our previous investors, we enjoyed substantial growth and are now in a strong position to take the business forward with our new partners Advent Venture Partners. We are ready to realise our further ambitions for Nuke and the rest of our product portfolio, ensuring the company goes from strength to strength whilst maintaining strong customer focus.”

Mike Chalfen, general partner at Advent Venture Partners, added, “We are delighted to be backing an innovative and entrepreneurial management team with such a strong reputation and enviable market leading track record that together will generate interesting opportunities for this business. The Foundry’s products are ubiquitous in its field, its 3D stereoscopic technology is poised to dominate its market, and the company is a true European digital technology success story. Furthermore, our investment fits with Advent’s strategic focus of backing capital efficient, defensible and differentiated businesses that have a number of levers to make money for shareholders. We look forward to working with the team to realise the company’s enormous potential.”

In March, Advent and LDC, Lloyds TSB’s mid-market private equity arm, completed the £72m (€83.8m) merger of their respective portfolio companies Snell & Wilcox and Pro-Bel. Both UK-headquartered businesses design and develop hardware and software products used by the broadcast, production and post-production industries.

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