HgCapital is pleased to announce that on 15 February 2017 it held a final close on the HgCapital 8 Fund and, separately, a first and final close on Mercury 2 Fund, both at their respective hard capitalisations raising a total of £3.1 billion. Both Funds were significantly oversubscribed and received strong support from existing investors.
HgCapital invests in industry leading businesses, with mission critical products, serving loyal customers. HgCapital seeks to back great entrepreneurs and management teams driven by the desire to develop their businesses to their fullest potential. HgCapital is currently partnering in 30 such investments across the larger buyout and Mercury funds, with examples including Visma, IRIS, JLA, Sovos Compliance and CogitalGroup. This fundraising progress follows a period of significant activity in 2016, during which HgCapital completed 10 new investments, 7 realisations and 3 refinancings; in total representing investment activity of c.£950 million and returning c. £1 billion of investment proceeds to investors.
HgCapital’s second Mercury fund extends the firm’s reach across Northern Europe to back smaller technology businesses and capitalises on HgCapital’s 20-year sector expertise and leading track record in the TMT sector. The Mercury team have invested in 12 leading European technology businesses (including Allocate Software, Intelliflo and Sequel Business Solutions) and the current portfolio of investments delivered aggregate revenue and EBITDA growth of 13% and 41% respectively during 2016. The Fund saw its first realisation last summer, the sale of Relay Software at a c. 40% IRR and a 2.1x investment multiple.
HgCapital Mercury forms part of HgCapital’s sweet-spot technology investment focus, which has a well-established and successful track record, having returned over £2 billion to clients at an overall realised investment multiple of 2.5x and a 36% gross IRR; across 14 investments over 16 years, with zero capital losses.
Recent realisations from other teams within the Firm have continued this performance, with the sale by the Services Team of Zenith, the independent car leasing provider, to Bridgepoint for a return of 2.9x investment multiple and an IRR of 46%; and the sale by the Munich team of P&I, the German HR and payroll software provider, to a company backed by funds of Permira for a return of 2.3x investment multiple and an IRR of 37%.
In addition to Mercury 2, HgCapital also announced the final closing of its HgCapital 8 Fund following a first closing at £1.9 billion of commitments in December. These successful fundraisings will enable HgCapital’s dedicated sector teams to continue to invest in, and support leading technology and technology-enabled service businesses across Europe and beyond.
The largest commitment to both funds came from HgCapital Trust plc.
Proskauer provided legal advice and Rede Partners advised on the fundraising.