Hg sells Zitcom Group to Intelligent
• 2 minute read
Exit has delivered a c. 3.3x investment multiple and c. 145% gross IRR after 18 months of ownership
Second exit from Hg’s specialist lower mid-market Mercury TMT fund, which has delivered aggregate realised returns of c. 2.8x and c. 70% gross IRR
The £380m Fund made its first investment in 2012; and has returned c. 40% of invested capital back to clients
Hg is pleased to announce that it has sold Zitcom Group, a leading Danish SME-focused hosting and cloud solutions provider, to Intelligent, a Belgian headquartered provider of hosting solutions. The terms of this transaction were not disclosed.
Hg partnered with the management of Zitcom Group in December 2015, representing the 7th investment for Mercury, Hg’s specialist lower mid-market TMT fund. This exit marks the second full realisation for the Mercury fund, following the sale of Relay announced in August 2016 and four prior successful recapitalisations across the portfolio.
Through organic growth and acquisitions, Zitcom Group has created a leading Danish SME focused hosting and cloud solutions provider with activities in both the mass and managed hosting space, including domains website hosting, email for smaller customers and managed servers and applications for larger customers. The group has demonstrated over ten years of consistent revenue growth and provides cloud services to over 100,000 business and private customers in Denmark, operating under the brands Zitcom, Wannafind, UnoEuro, Curanet, ScanNet and Cloud.dk.
The business displays many of the characteristics that Hg looks for including: an attractive growth sector; a loyal customer case; a strong management team; and platform potential for M&A.
During Hg’s 18-month ownership period, Hg has supported Zitcom Group’s acquisition and integration of four companies which has helped double the customer base and revenue while close to tripling profits of the Group.
Following this sale, the Mercury 1 Fund will have returned nearly 40% of invested cost, including proceeds from the prior exit of Relay Software (announced in July 2016 for 2.1x cost / 39% gross IRR) and a combination of other portfolio company refinancings. The Fund has delivered overall realised returns of c. 2.8x cost and a c. 70% gross IRR.
Stefan Rosenlund, CEO of Zitcom Group, said: “Hg has been a fantastic partner for Zitcom Group and has helped us mature – both as a business and as individuals. Hg has been a huge asset in developing Zitcom Group into a strong and market leading hosting group ready for new challenges and new ownership. I thank Hg for the trust and time that they have invested in us and look forward to continue Zitcom Group’s growth journey in the Danish SME hosting market.”
Nick Jordan, Director at Hg, said: “It has been a pleasure to partner with the Zitcom Group management team and employees over the last 18 months and play a role in building a leader in the Danish SME hosting segment. They have transformed their sector in Denmark. We wish them continued success in this exciting new phase of their story”
Hg were advised by Harris Williams, Linklaters and Accura.