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Hg November Highlights

04/12/2018 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. Catch up here

Megabuyte50 Awards honour Commify, Foundry, Access Group, IRIS, FE & Allocate Software

22/11/2018 The 2018 Megabuyte50 awards, honouring the UK's best-performing, mid-market ICT Services and Software companies, were announced on Tuesday and featured six UK software businesses, currently backed by Hg. Read the full report here. A record for Hg, the six named companies place Hg as the top technology and software investor in the 2018 list, with more portfolio companies featured than any other investor for the second year running. The companies' performance is scored using Megabuyte’s proprietary Scorecard benchmarking methodology which assesses companies against seven sustainable growth-related KPIs. Companies are awarded a Scorecard rating (a mark out of 100) and then ranked against their peers. Access Group, Allocate Software, FE and IRIS all placed in the 50 while Commify (MB profile) and Foundry (MB profile) were also named as ‘Best Performing Company’ in their respective categories (Mobile, Wireless and Satellite and Specialist Applications). All six are application software businesses and represent ‘sweet spot’ characteristics that Hg looks for in all of our investments. Hg’s team of 50 technology focused investors and operating partners represent the largest and most experienced in Europe, reinforcing Hg’s position as #1 software & tech-enabled services investor across Europe & one of the top 5 globally. Matthew Brockman, Managing Partner of Hg, said: “It is fantastic to see the continued success of Foundry, Commify, IRIS and Access, all of whom featured in last year’s list.  It is greater still to see Allocate and FE honoured for the first time. Hg’s portfolio past and present has always been well-represented on the MB50, with recent Hg exits, Sequel and Intelliflo, appearing alongside our current investments. Technology is an attractive and fast-growing sector and the fact that all of our eligible portfolio companies feature this year is a testament to our scale and capability in UK software and tech-enabled services technology.” About Megabuyte Megabuyte is an independent research provider servicing the UK's leading technology sector CXOs, investors and advisers. We deliver expert, independent and strategically actionable insights addressing the financial and corporate affairs of some 600 of the UK’s key public and private technology companies in the ICT Services and Software sectors. A combination of our proprietary content, rigorous analytics and deep domain experience make our research and opinions highly sought after by those seeking incisive and unvarnished intelligence and insights. Our research is available on-line, through subscription or pay-as-you-go, or on a retained or ad-hoc consultancy basis. The megabuyte50 award series identifies the Top 50 best-performing, privately-owned mid-market companies in the UK’s Software and ICT Services sectors.

Hg announces final closing of Hg Saturn 1 Fund at £1.5bn

22/10/2018 Hg Saturn 1 Fund (“Saturn”), a software‑focused, large‑cap buyout fund raises a total of £1.5 billion; Saturn to invest in software companies valued at an enterprise value of over £1 billion; Saturn fund 40% invested via two of the largest ever private equity led software buyouts in Europe: Visma and IRIS; Continues Hg’s position as number 1 investor and owner of technology businesses in Europe; Hg’s software investments have delivered realised returns of 2.8x gross MoC and 37% gross IRR across last 15 years. 22 October 2018: Hg is pleased to announce that it has held a final close on the Hg Saturn 1 Fund (“Saturn”), a software‑focused, large‑cap European buyout fund, at its hard capitalisation raising a total of £1.5 billion. Saturn is a natural extension of Hg’s technology focus, from which the firm’s success and broad networks have created a leading position, right at the heart of the European technology market.  The objective of Saturn is to invest in companies valued at an enterprise value of approximately £1 billion and above, with equity requirements in excess of £500 million, behind the same technology business models into which Hg already invests through its existing Funds, principally Hg8 and Mercury 2. Hg’s team of 50 technology focused investors and operating partners is the largest and most experienced in Europe and, over the last 20 years, Hg has become the leading investor and owner of Software-as-a-Service and application software businesses in this region, having led or co-led 9 out of the top 20 largest European software buyouts. Today, combining the revenues of Hg’s technology investments, would make its software portfolio equivalent to the third largest software company in Europe. Deep domain knowledge of the tech and software sector enables Hg to derive greater growth and value creation in the companies they partner with. As a result, during the last 15 years, Hg has acquired technology businesses with more than £10 billion of enterprise value, investing in over 45 technology buyouts and more than 100 bolt-on acquisitions. Hg has delivered realised returns for its software investments of 2.8x gross MoC and a 37% gross IRR. Saturn received strong support from existing Hg investors, as well as those making their first commitment to Hg. Having held a first close earlier in the year, the Saturn Fund is now currently 40% invested across two high quality businesses: Visma (£4.4 billion buyout in 2017) and IRIS (£1.3 billion buyout in 2018). The closing of Saturn follows a period of significant activity from Hg since the start of 2017, during which time the investment teams have completed 15 investments and 19 realisations, which have returned total proceeds of more than £3.2 billion to investors. Nic Humphries, Senior Partner at Hg and Head of the Hg Saturn Fund, said: “The secular growth of the software industry is one of the most important and persistent features of the modern economy and enables us to build better businesses across many different sectors. Saturn is an important strategic addition to Hg, since it provides us with ubiquity to invest everywhere from small to very large software businesses in Europe. We are pleased that the businesses we back provide great returns for our investors, whilst at the same time growing employment in knowledge-economy jobs in the UK and Europe.  We are also delighted to bring on board a high quality group of investors that have supported the Fund and we thank our clients for their support.” Software now accounts for c. 15% of corporate capex today, versus c. 5% in the early 1990s. End-user spending on software is expected to grow at an 8.5% CAGR (2016-2021) from an already high, and increasing base. Nearly 100,000 software and technology services companies are expected to be operating by 2021, worth over $7.5 trillion enterprise value in total, according to the research firm Gartner. This growth has driven the increased incidence and size of large-cap software companies, from c. 150 to c. 350 in the last 10 years. Proskauer provided legal advice and Rede Partners advised on the fundraising.

Hg announces an investment in BrightPay

10/09/2018 10 September: Hg today announces that it has agreed a first investment of Transition Capital in BrightPay, a provider of Accounting and HR payroll software to SMEs in Ireland and the UK. The terms of the investment are not disclosed. Hg’s structured minority investment strategy will fund the investment in BrightPay. Transition Capital offers privately-owned businesses an attractive alternative to a minority equity sale, through structured equity, which gives entrepreneurs access to the support of Hg and its network, whilst retaining control of their business. Based near Dublin, BrightPay provides easy-to-use and cutting-edge software solutions to enable SMEs to manage payroll, supported by excellent customer service. BrightPay’s software is used by over 120,000 employers across the UK and Ireland under two brands, BrightPay and Thesaurus Software. BrightPay’s business of Accounting and HR payroll software is a very familiar sector to Hg and represents the 10th investment in businesses within this space. Payroll in Ireland is scheduled to undergo significant change from January 2019, as Ireland rolls out PAYE modernisation, which will require employers to report PAYE in real time to the Irish Revenue Commissioners (“Revenue”). BrightPay has invested significantly ahead of this change to prepare to support Irish SMEs through this transition. Peter Miholich, Director at Hg, said: “We have been really impressed by the dedication of the BrightPay team to delivering great software and outstanding service to their customers. We look forward to partnering with Paul, Ross and the team to take BrightPay to the next stage of its development, adding our experience and strong track-record of working with successful businesses in Accounting and Payroll software.” Paul Byrne, Founder and Managing Director at BrightPay, said: “Hg is a hugely credible investor in this sector and it’s great to secure an investment from a firm who both knows our market and has the experience to help us develop the business.”

Hg announces investment into Allocate Software from Hg8 Fund

30/08/2018 30 August 2018. Hg today announces an investment in Allocate Software (“Allocate”), a leading international provider of workforce solutions to the healthcare, defence and maritime sectors. Allocate supports the operational and administrative needs of healthcare professionals in all healthcare settings as well as defence and maritime staff globally. In healthcare Allocate is enabling the delivery of safe and effective care at optimal cost, by helping organisations to have the right people in the right place at the right time. Allocate serves the largest public and private healthcare institutions around the world, with over 800 clients and over a million staff rostered daily - over 700,000 of which are now managed on the ‘Optima’ software-as-a- service (SaaS) platform. In the defence and maritime sectors, Allocate’s Dynama Oneview platform is supporting some of the most prestigious organisations globally helping them make decisions and control costs with time-based management of people, resources and operations. Allocate has 500 employees, with over 190 working in the R&D and product management functions. It is headquartered in the UK. Hg initially invested in Allocate at the end of 2014, completing a public-to-private transaction from the London Stock Exchange. In April 2018, Hg announced the sale of Allocate to Vista Equity Partners (“Vista”). Recognising Hg’s considerable expertise in healthcare software and its pan-European footprint, Vista provided Hg with an option to reinvest in the next phase of Allocate's growth. Hg is pleased to announce that it has exercised that option to re-invest and partner with Vista by acquiring a co-controlling stake in Allocate. This will represent the third investment made by the Hg8 Fund, bringing the fund to c. 27% invested. Jean-Baptiste Brian and David Issott, Partners at Hg, said: “Hg invests in businesses that demonstrate compelling long-term growth potential and we are looking forward to working with the Allocate team, continuing to deliver the company’s ambitious plans. This opportunity to invest is a testament to the further potential we see with Allocate and our positive relationship with the company. Healthcare technology is a core investment area for Hg: Allocate is the third investment in the cluster announced this year, after MediFox and Rhapsody.” “We are excited to continue to work with the Allocate team to grow their business and provide their platform and technology to even more healthcare providers and professionals across the globe,” said Alan Cline, Principal and Co-Head of the Foundation Fund at Vista. “Hg’s re-investment in Allocate is an affirmation of Allocate’s strategy and growth potential moving forward, and we are thrilled to have Hg as an investment partner.” The terms have not been disclosed. Spurrier Capital Partners served as financial advisor to Vista.

Syneos Health™ acquires Kinapse

20/08/2018 Syneos Health™ acquires Kinapse to further enhance end-to-end capabilities  Addition of Market Leading Advisory and Operational Solutions Provider Increases High-Value Offerings and Expands Operational Scale in Key Growth Markets https://kinapse.com/Syneos-Health-acquires-Kinapse RALEIGH, N.C. – August 20, 2018 – Syneos Health, Inc. (Nasdaq:SYNH) (“Syneos Health” or “the Company”), a leading biopharmaceutical solutions organization, today announced the acquisition of Kinapse, a market leading advisory and operational solutions provider to the global life sciences industry, from Hg, a specialist investor based in the U.K. Established in 2005, Kinapse delivers services across the clinical and commercial lifecycle, and will further enhance Syneos Health’s ability to provide customers with end-to-end solutions to accelerate time to market. Kinapse’s capabilities expand Syneos Health’s regulatory, safety and pharmacovigilance consulting and operations in the post-market arena – outsourcing areas expected to experience double-digit growth. Additionally, the acquisition deepens the scale and scope of Syneos Health’s clinical trial transparency, medical writing and quality operations and consulting capabilities in the areas of R&D and clinical operations, medical affairs, market access and quality and compliance. Kinapse works with small to mid and large biopharmaceutical companies — including many of the top 20 global biopharma companies — and has more than 600 employees across the United Kingdom, India and the United States. The acquisition increases Syneos Health’s Asia Pacific operational and delivery capabilities and doubles the Company’s consulting footprint in Europe. Kinapse operations will be integrated into Syneos Health’s award-winning consulting business, a business which drives connections between Syneos Health’s core clinical and commercial offerings to optimize product launch and commercialization results. “As customers increasingly face risk, competition and rising development costs, the innovative, technology-enabled solutions provided by Kinapse are seeing increasing demand,” said Alistair Macdonald, Chief Executive Officer of Syneos Health. “Through this combination we continue to inject new and enriched high-value solutions into the industry’s only end-to-end offering, unlocking value for all of our biopharmaceutical customers. Additionally, with Kinapse’s growth, recurring revenue streams and new cross-selling opportunities, we’re poised to further strengthen our Commercial business by integrating their services into more comprehensive offerings.” “We’ve been following Syneos Health as the Company has forged a new model for accelerating therapies to market, and we look forward to adding further depth to its end-to-end offering. We see growth opportunities driven by the integration of our solutions and the ability to tap into Syneos Health’s broad customer base,” said Dawn Marriott-Sims, Executive Chairman of Kinapse. “On behalf of the Kinapse management team, I want to extend my thanks to our dedicated employees for their tireless work that has made this combination possible, as well as Hg, whose support as an investor has been transformational over the last several years.” Macdonald added, “This combination is an ideal strategic and cultural fit. We welcome the Kinapse team to the Syneos Health family and look forward to bringing more innovative services to our customers.” Syneos Health is funding the transaction through cash on hand. Financial terms of the transaction were not disclosed. The Company expects the transaction to be accretive to its earnings and remains committed to achieving a net leverage ratio of approximately three times by the end of 2019. The Company reaffirms the 2018 guidance range provided on August 2, 2018.