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  • First realisation from HgCapital 7 Fund
  • Delivers 36% IRR and 2.3x investment multiple
  • HgCapital has returned c.£1 billion in 2016 year to date
  • HgCapital 7 Fund has now returned approximately 25% of invested cost

HgCapital is pleased to announce that it has agreed the sale of Personal & Informatik AG (“P&I”), a leading provider of payroll and strategic HR software headquartered in Germany, to a company backed by funds of Permira, an international investment firm. The terms of this transaction have not been disclosed.

HgCapital initially invested in P&I in December 2013 and this and was the first investment from the HgCapital 7 (December 2013 vintage) Fund. This sale is the first exit from HgCapital 7 and delivers a 36% IRR and 2.3x investment multiple. HgCapital has retained a minority position of €70 million. The HgCapital 7 Fund has returned approximately 25% of invested cost from this exit alone, with further liquidity expected to be generated over the coming months through a number of planned refinancings.

Founded in 1968 and headquartered in Wiesbaden, P&I is a leading supplier of integrated HR software solutions for payroll, strategic HR and analytics. The company serves more than 15,000 customers, ranging from small and medium-sized private businesses (SMB) to public sector organisations of all size mainly across Germany, Switzerland and Austria (DACH region), but also in 10 other European countries.

The investment in P&I followed a decade of tracking the business prior to investing, which enabled HgCapital to build a strong relationship with the business’ management over time and conduct thorough due diligence through the cycle. The investment in P&I is typical of HgCapital’s approach to sourcing, origination and the business model characteristics which HgCapital looks for and which remain its focus.

Through its resilient business model with a high share of recurring revenue, P&I performed ahead of investment case throughout HgCapital’s ownership period, delivering double-digit EBITDA growth. The strong performance is a result of constant investment of P&I into innovation and expansion of its product and cloud offering, driving cross-sell of new HR technology including human capital management, recruiting and analytics solutions to its existing customer base, as well as strong wins of new customers. P&I’s high growth and cash flow performance ahead of investment case enabled HgCapital to refinance the business in January 2016, returning c. 0.6x original cost to the HgCapital 7 Fund. The company’s performance and attractive business model which we identified at acquisition, as well as its high quality management generated favourable competitive dynamics from a number of potential buyers over recent months.

Kai Romberg, Partner at HgCapital, said: “This realisation is a result of the hard work and dedication from our investment team over the last decade, from the extensive due diligence prior to investment to the strong relationship built with management throughout ownership. P&I has an impressive business model and performed ahead of expectations, delivering significant double digit growth during this time. We are particularly pleased to be able to announce our first exit from HgCapital 7 with an attractive return, demonstrating our strength and capabilities in the regulatory driven and payroll software space. We thank the management of P&I for their trust and co-operation throughout our investment that formed the basis of this result, and we are happy to remain invested, providing us with the opportunity to benefit from the future success of the company.”

Justin von Simson, Partner at HgCapital commented: “We have had a very successful partnership with P&I and are proud of what the Company has achieved since we first entered into that relationship. At the same time, we believe that there are numerous further growth opportunities ahead and would be excited to contribute to the next leg of that journey.”

“With the acquisition of P&I, the Permira funds strengthen their position as one of the largest software investors in Europe and particularly in the DACH region”, said Jörg Rockenhäuser, Head of the DACH region at Permira. “We are delighted to bring our deep expertise in the technology sector and our extensive knowledge of the German market to support the future growth plans of P&I.”

“This is an exciting new chapter for our company. I’m convinced that the Permira funds with their deep understanding of the software sector are the ideal partner for the next step of our growth story”, said Vasilios Triadis, CEO of P&I. “We thank the HgCapital team for its support in strengthening our position as a technology leader in the European HR software space, and we appreciate its continuous investment as a strong sign of confidence in our growth prospects.”

HgCapital were supported by Arma Partners and GCA Altium as joint financial advisers on the sale.