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Self-serve coffee business Coffee Nation has been bought by private equity firm Milestone Capital Partners via a secondary management buy-out (MBO). The deal valued the £20 million turnover business at approximately £25 million.

Milestone, which manages €400 million (£315 million) and invests mainly in the UK and France, led the transaction and provided equity funding for the deal. Royal Bank of Scotland offered senior debt and loan facilities for working capital, while private bank Investec provided £5.25 million of mezzanine finance.

Coffee Nation, which operates 550 machines in outlets including service station operator Welcome Break and supermarkets Tesco and Somerfield, plans to use the funding to expand within its existing markets, launch new products, and grow its dedicated customer service department.

CEO Scott Martin says his ambition is to turn Coffee Nation into one of Europe’s leading coffee brands.

Founded in 1999, Coffee Nation’s first MBO the following year was funded by an investment of £4 million from private equity firm Primary Capital.

Its sale to Milestone comes less than a week before changes to capital gains tax come into force that will see the basic rate of ten per cent raised to 18 per cent.

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