Strong activity across the portfolio

Strong activity across the portfolio

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  • Hg June Highlights

    04/07/2018 Welcome to our program of monthly digests, designed to keep you updated with news from Hg and our network of portfolio companies. If you would like to subscribe, please email us. June was a busy month for Hg with a brace of investments and exits alongside a wealth of activity in the portfolio. Catch up here

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  • Hg Invests in Orion Health Rhapsody and Population Health Businesses

    03/07/2018 All figures in NZD AUCKLAND, New Zealand - 3 July 2018 - Orion Health Group Limited (NZX:OHE/ASX:OHE, “Orion Health” or the “Group”) today announces that it has reached agreement in relation to Orion Health’s Rhapsody and Population Health businesses with private equity technology investor Hg (“the Hg Transaction”). In April 2017, the Group announced a strategic review focused on long-term shareholder value, including the evaluation of any partnerships or minority investments to allow Orion Health to achieve its potential. The conclusion of this lengthy and comprehensive review has recognised that the Group’s three businesses would each benefit from different funding, investment backing and partnerships and that it was in the best interests of the Group and its shareholders to consider options individual to each business. The Group has been working with Hg for a number of months and has now concluded an agreement which the Board is pleased to set out below. Summary: • The agreement is for entities managed by Hg to acquire majority ownership of Orion Health’s Rhapsody business (“Rhapsody”) and to invest in Orion Health’s Population Health business (“Population Health”). • Hg is a specialist technology investor committed to helping build global businesses with funds of c.£10 billion under management. • The Hg Transaction implies a $255 million enterprise value of Orion Health. • Following completion of the Hg Transaction, Orion Health will undertake a share buyback offer at an estimated price range of $1.24-$1.29 per share (the “share buyback offer”), with the final offer price dependent on Orion Health’s available cash immediately following completion taking into account transaction costs and working capital adjustments in relation to the Rhapsody transaction. Shareholders will have the option to accept the share buyback offer in respect of all or a specified proportion of their Orion Health shares. • The bottom of the estimated buy back price range represents a premium of 46% to the closing price per Orion Health share of $0.85 on 2 July 2018 and 55% to the volume weighted average trading price over the last 20 trading days. • The Hg Transaction is subject to a number of conditions, including approval of the Hg Transaction and the share buyback offer by Orion Health’s shareholders. A notice of meeting describing the Hg Transaction and the share buyback offer will be circulated to shareholders. The independent directors have commissioned an independent report from KordaMentha in respect of the Hg Transaction and the share buyback offer, which will be provided to shareholders with the notice of meeting. ........ Next Chapter for Orion Health “This investment provides Orion Health with a tremendous opportunity to deliver on our vision for customers, our people and for the healthcare sector,” said Ian McCrae, Founder and CEO, Orion Health. “We received strong interest in Orion Health’s business throughout the strategic review process and the Board and I believe that Hg is the right partner to accelerate the expansion of Rhapsody and support our vision for Population Health.” Healthcare technology is a core investment area for Hg, having recently completed a number of transactions across the sector. This investment will be made from Hg’s Mercury 2 Fund. “Hg has been researching the theme of interoperability and population health management in healthcare IT over many years,” said David Issott, Partner, Hg. “We believe this is a key global growth theme backed by substantial market funding and resources. Rhapsody provides fantastic products and services for this market and we look forward to partnering with the team at Rhapsody to maximise its potential across the globe. We are also excited to work with Ian and the team to realise the full potential of the Population Health business.” Orion Health built the first Rhapsody integration engine in the late-1990s quickly becoming one of the most recognised interoperability platforms for healthcare organisations today. The combination of Rhapsody’s global team and Hg’s resources will extend Rhapsody as a leader in the interoperability platform space, building on both Rhapsody’s world class technology and highly rated customer service. Philippe Houssiau, an experienced global technology executive, will step in to lead the Rhapsody business and will join the new board of Population Health from closing. Philippe has broad experience in leading healthcare businesses, consulting and start-ups, and is formerly CEO of Agfa Healthcare, CEO of Alliance Medical and a Senior Partner with PwC. “As the healthcare sector evolves, so too has Orion Health. We recently restructured our teams into three businesses focused on Rhapsody, Population Health and Hospitals, repositioning Orion Health around market potential and focusing dedicated teams to support customers, improve operating performance and drive growth,” said McCrae. “We remain committed to the ongoing success of Rhapsody and supporting customers across our entire Orion Health business.” Orion Health believes the biggest advances in healthcare technology will come from advanced analytics and better dataflow to address critical issues within the sector. In the face of growing and aging populations and the rise of chronic diseases, health systems the world over are under enormous strain. The focus of Orion Health’s Population Health and Hospitals business is to help the sector optimise healthcare budgets and address the transformation necessary in the healthcare industry. “This injection of capital will advance Orion Health’s businesses to reach their full potential over time. For our Population Health business, it will help strengthen our position as a market leader, and for our Hospitals business, it will further support its growth,” said McCrae. For more details:

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  • Hg invests in IT Relation

    14/06/2018 14 June 2018. Hg today announces that it has agreed to invest in IT Relation, a leading Danish supplier of managed IT services to small and medium sized enterprises (SMEs). Hg will acquire a majority stake in IT Relation from Adelis Equity Partners. The closing of the transaction is subject to regulatory approval and the terms are not disclosed. Founded in 2003, IT Relation provides services which allow SMEs to move their IT infrastructure and operations into the cloud, as well as providing end user support and consulting as part of a full-service IT offering. The company has more than 450 employees supporting thousands of customers and tens of thousands of users in Denmark and around the world. This investment is consistent with Hg’s focus on SME Technology Services in Europe, with other activity in this sector including investments in Zitcom (2015) and DADA (2017), both providers of online hosting services to SMEs. Hg will support the management team to build a clear industry champion based on IT Relation’s excellent customer service and operating platform. Nick Jordan, Partner and Jonas Samlin, Principal, at Hg, said: “Henrik Kastbjerg and the IT Relation management team have built an exceptional business addressing the need for SMEs to operate their mission-critical IT in the cloud. We look forward to partnering with the business in the next phase of growth in Denmark and internationally.” Henrik Kastbjerg, CEO of IT Relation said: “It has been a great journey with Adelis and now we are very excited about the next phase with Hg. Hg has a proven track record of investing in and developing tech and software companies and can support our further growth in Denmark as well as internationally.”

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  • Hg agrees sale of Intelliflo to Invesco

    06/06/2018 Transaction is the sixth realisation achieved by the Hg Mercury 1 fund. Mercury 1 fund now has a gross realised fund multiple of 3.4x original cost and 44% gross IRR. Represents the 16th realisation across all Hg funds in the last 18 months - returning over £3 billion in aggregate. 6 June 2018 – Hg today announces the sale of Intelliflo, a leading Software as a Service (‘SaaS’) business for UK financial advisors, to Invesco, the Atlanta-based global investment management company. The terms of the transaction are not disclosed. Intelliflo is a UK provider of front and back‑office software solutions to financial intermediaries, including IFAs, wealth managers, adviser networks, insurance/life companies and brokers. Intelliflo’s Intelligent Office (“iO”) software platform is the backbone of the UK wealth sector, assisting financial advisors across the full advice journey - including client relationship management, financial planning, client reporting, portfolio valuation and provision of advisor-led automated advice. Hg partnered with Intelliflo in 2013, in line with its strategy to invest in leading recurring revenue vendors in the financial services software sector. Over the past five years, Hg has supported the company to implement best in class SaaS practices in development, operations, sales and marketing – under the leadership of Nick Eatock, founder, and Hamish Purdey, CEO. The company has experienced a material acceleration of revenue growth in this period and has become the leading technology platform for financial advisors in the UK, successfully supporting the business of around 30% of UK financial advisors. This is the sixth realisation achieved by the Hg Mercury 1 fund, which has now a gross realised fund multiple of 3.4x original cost and 44% gross IRR. The sale also represents the 16th realisation across all Hg funds in the last 18 months, which have in aggregate returned over £3 billion to clients. Sebastien Briens, Partner at Hg, said: “During our partnership with Nick, Hamish and the team at Intelliflo we have supported the company to become one of the world’s leading innovators of SaaS technology for the wealth and asset management industry. We are delighted to see them starting a new partnership with Invesco. We will continue our focus on the asset management and wealth sector, having already partnered with several exciting businesses serving this vertical.” Hamish Purdey, Chief Executive Officer at Intelliflo said: “We would like to thank Hg for all their support since 2013 in getting us to this stage in our development. In a comparatively short space of time, we have built one of the UK’s largest pure-play software as a service businesses, and we now look forward to expanding our business, taking our leading technology into new markets across the globe. We will continue with our open architecture philosophy after the sale – it remains critically important to us that our financial adviser customers continue to be able to select from a wide range of product providers.” Intelliflo and Hg were advised on this transaction by Evercore, Linklaters and Deloitte.  The management team were advised by Fieldfisher.

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  • Visma Group intends to acquire Raet

    29/05/2018 29 May 2018 - Visma Group and Raet have signed an agreement whereby Visma intends to acquire 100 percent of the shares of Raet. The intended acquisition follows a competitive sales process, commenced earlier this year by the Hg7 Fund. The agreement is subject to the parties having completed the consultation procedures with both Raet's Dutch works council and Visma's Dutch works council, and the parties having informed the relevant Dutch trade unions of the intended transaction. Raet and Visma Group combined will become one of Europe’s leading HR solutions providers, delivering software and services to more than 10 million end-users. Raet is a highly strategic and complementary acquisition for Visma, strengthening its presence in the Netherlands and Belgium, where Visma already provides bookkeeping, ERP, payroll and related cloud software. In addition to Visma’s existing business in the Netherlands, the combined businesses will have over €200m revenues, 1,500 employees and increase the previous customer base across the two regions to 50,000. The combination will also substantially expand Visma’s addressable market and allow it to provide Raet’s existing customers with access to Visma’s leading suite of cloud software applications, enabling them to benefit from joint innovation capacity and agility. This will help make the business more efficient as well as helping to further develop the organisation and people. Øystein Moan, CEO of Visma, says: ‘’The highly skilled workforce of Visma and Raet together form a strong international HRM environment. This strengthens our ability to continue providing new and existing customers with long-term sustainable solutions. The acquisition leads to mutual added value and growth opportunities as Raet’s offering fits well with Visma’s HRM strategy’.” Kobe Verdonck, CEO of Raet, says: ‘’Raet joining Visma increases our world-class HR innovation and offering which will provide new opportunities for both our customers and employees. By joining Visma, Raet further strengthens its position in the Dutch market.” Justin von Simson, Managing Partner at Hg, said: “As investors with over 20-years’ deep knowledge of software, having invested or acquired over 200 software businesses across Europe, we are able to identify attractive opportunities for companies within our portfolio, such as Visma and Raet, which operate in similar industries. These can lead to significant benefits, such as shared knowledge, complementary capabilities and synergies. Visma submitted a compelling offer for Raet and, by working together, we can see that there are great advantages for both companies and their customers going forward.” No details around the intended transaction will be disclosed. Completion of the transaction is expected in the summer of 2018.

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  • Hg Saturn Fund makes new joint partnership investment in IRIS with ICG

    23/05/2018 UK’s largest ever and Europe’s third largest ever private equity led software buyout, representing an EV of around £1.3bn. Investment in IRIS follows the company’s positive track record, solid long term strategy and strong executive leadership. ICG to take a joint partnership stake alongside Hg, acknowledging Hg’s strong 14 year relationship, in-depth knowledge and experience with IRIS. Second investment from Hg Saturn Fund, launched in 2017. In aggregate, Hg’s investments in software businesses have an enterprise value of more than $17billion, making Hg the owner of the fourth largest software group in Europe, after SAP, Amadeus and Dassault. 23 May 2018 - Hg Saturn Fund and Intermediate Capital Group (“ICG”) announce today a joint partnership investment into IRIS, a leading provider of business-critical software and services to the UK accountancy, education and business market, representing the largest UK and third largest European private equity software buyout ever. The terms of the transaction are not disclosed and closing is subject to regulatory approvals. Over 21,000 accountancy practices and more than 80,000 small and mid-sized businesses, corporates, and payroll bureaus rely on IRIS to run their business every day. IRIS exhibits a number of Hg’s ‘sweet spot’ business model criteria, including a strong product offering, a loyal customer base, superior software metrics with high degrees of recurring revenue and cash flow conversion and a proven M&A platform with significant cross-sell opportunities. IRIS has a strong performance track record, demonstrating consistent revenue growth over the last 17 years, driven by deep domain knowledge, as well as a good breadth and depth of functionality across its product portfolio. Hg will invest alongside ICG, with both parties having joint partnership in IRIS.  Hg’s investment will come from the Hg Saturn Fund, which had its first close in early 2018.  The Fund focuses on software businesses with Enterprise Values of more than £1 billion. The Hg6 Fund has sold 100% of its interest in the business to Hg Saturn and ICG. The sale follows a competitive auction process, launched in March 2018. ICG submitted a compelling bid for participating in this investment, acknowledging Hg’s strong relationship, in-depth knowledge and experience with IRIS over the last 14 years since Hg first acquired the business in 2004. The realisation of IRIS will deliver an overall return to Hg6 clients of 4.2x original invested cost and a gross IRR of 26%. Hg6 originally invested in IRIS in December 2011 and over the course of the Fund’s investment, the business has experienced strong revenue, EBITDA and cash flow growth, across market cycles. At an exit valuation of £1.3bn, the business has more than trebled in size over the last 6 years. This is the 18th exit from the Hg6 Fund to date, and following completion of the sale the Fund will have returned c. 207% of invested cost to Hg6 investors. Nic Humphries, Senior Partner and Head of the Saturn fund at Hg, said: “Hg first invested in the tax and regulatory compliance software market in 2004 via IRIS.  Since then we have invested in 11 platform companies and more than 200 acquisitions – we currently own businesses worth over $10bn in this sector including IRIS, Visma and Sovos, all growing faster than their peers.   This clustered investment strategy gives us unique insights and experience which benefit the companies we back, their customers and their employees.  We are delighted to back Kevin Dady and his team again through our Hg Saturn Fund.” Benoit Durteste, CIO of ICG said: “ICG is delighted to invest in IRIS and once again support Hg.  We have worked together with Hg successfully on software deals including Visma and Team System, and they have a proven track record in this sector.  In our opinion IRIS is a first class business with a great track record led by a talented management team, focused on regulatory and compliance driven software solutions.  IRIS is well positioned for further organic and inorganic growth. It is a great way for us to start our new ICG European Fund VII.” Kevin Dady, CEO of IRIS said: “The renewed Hg investment, alongside ICG, is recognition of continued success. We’ve developed best-in-class products across the businesses, continuously improved customer service and extended our product portfolios through strategic acquisitions to either enter new or grow existing markets. We look forward to continuing our strong working relationship with Hg and also look forward to working with ICG; supported by a solid long-term strategy, an exceptional leadership team and talented employees as we will continue our mission - to help businesses stay one-step-ahead of their competition.” Hg Saturn was advised on this transaction by DC Advisory, Linklaters and OC&C. IRIS was advised by Arma Partners, Skadden, Deloitte and Bain & Co.

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