- Hg leads the largest ever European software buyout in a transaction valued at NOK45bn / £4.2bn / $5.3bn
- Hg led the buying investor group and will ultimately represent 41% of Visma equity as a result of this transaction; significant minority investors are Cinven, GIC, Montagu and ICG alongside management who will retain a 7% stake in the business
- Hg led the public-to-private investment in Visma in 2006 and has been a key shareholder for 11 years, increasing its ownership in both 2014 and now in 2017
Hg has today announced a further investment into Visma Group Holdings (“Visma”), a leading provider of business-critical software to SMBs in the Nordic and Benelux region. Hg will invest a further £238 million, in addition to its current holding, valuing the total business at an enterprise value of NOK45 billion (£4.2 billion, US$5.3 billion), making this the largest ever software buyout in Europe and one of the top 5 globally.
Hg will be the lead investor in the new transaction structure, representing 41% of the equity, alongside GIC, Singapore’s sovereign wealth fund, Montagu and ICG, who will hold minority stakes. Following this transaction, KKR will have realised its entire stake in the business, with Cinven separately retaining a shareholding of c. 17% in Visma. GIC, Montagu and ICG are all committing direct capital to the business, which continues to demonstrate the ability of Visma to attract world-class institutional investor support to help drive the future growth of the business.
This group is collectively acquiring 100% of KKR’s stake in Visma and 40% of Cinven’s shareholding as part of their exit process; investing a total of c. £1.4 billion of equity as part of the transaction. Completion is subject to regulatory approval.
This transaction values Hg’s 2014 investment in Visma at 2.4x original cost / c. 36% gross IRR in NOK, after less than three years of ownership.
In 2002, Hg’s TMT team identified regulatory-driven, subscription-based software as an attractive sub-sector with scope for considerable growth over the following decade. Hg has made more than twelve investments in the regulatory-driven software space over the last fifteen years and more than 150 bolt-on acquisitions over this same period. In total Hg has made 37 software TMT investments and over 200 bolt-on software acquisitions since 2002, making the firm comfortably the most active European TMT investor over this period.
Hg initially invested £101 million in Visma in 2006 (through the firm’s Hg5 fund), completing a public-to-private de-listing from the Oslo stock exchange valuing the business at £382m at that time. Hg subsequently continued to hold a stake in the business and supported Visma’s continued growth over the next eight years, before re-investing again in 2014 (through its Hg7 Fund), alongside both KKR and Cinven.
Visma gives investors ongoing exposure to a leading provider of mission critical accounting, resource planning and payroll software to small and medium-sized enterprises as well as the public sector in the Nordic region. Hg has known Visma and its management team since 2004 and will continue to support the business going forward in order to grow revenues both organically and through acquisitions.
Hg will continue to work with Visma’s management in the ongoing transition of the company’s software products to Software as a Service (“SaaS”). Visma is one of the leading SaaS providers to SMB’s and the public sector in Europe, with the potential to accelerate this growth both through organic investment and further bolt-on acquisitions.
Visma’s performance over the eleven years since 2006 has been consistently strong, growing both revenues, profit, employee numbers and research and development investment every year including throughout the financial crisis, Visma’s revenues grew from NOK1.6 billion in 2006 to NOK7.9 billion in 2016, a compound annual growth rate of 17%; EBITDA increased from NOK240 million in 2006 to NOK1.9 billion in 2016, (CAGR of 23%). Separately, the company has also completed more than 120 bolt-on acquisitions over the same period and improved operating margins from 15% to 25%.
“We have been incredibly fortunate to partner with Øystein Moan, CEO of Visma, and his exceptional management team over the last 11 years. They and we have an exciting vision for the business which sees us delivering an ever-increasing number of products and services to our millions of happy customers” said Nic Humphries, Senior Partner and Head of the TMT team at Hg.
Øystein Moan, CEO of Visma commented, “With KKR now realising their holding after 7 years of investment in Visma, the management team appreciates our long-term investor Hg, increasing their holding in the business to 41%. KKR have been good owners of Visma and the company has enjoyed strong growth under their guidance. With deep sector knowledge, Hg has made a significant contribution to the development of Visma since 2006, and we look forward to working together towards pan-European expansion and transformation to a pure cloud computing company together with Cinven, GIC, Montagu and ICG. This global network and access to capital will be important when developing and growing Visma over the coming years.”
Hg and the buying investor group were advised on this transaction by Arma Partners, Lazard, Deloitte, Skadden, White & Case and Bain & Co.