In the largest ever software deal in Europe, LSE-listed HgCapital has led a $5.3-billion buyout of Visma in a transaction that will see the investor group acquire 41 per cent of the tech company with Singapore’s sovereign wealth fund GIC picking 12 per cent. The deal is valued at EUR 4.7 billion ($5.36 billion).
The deal will see the firm’s management retain a 7 per cent stake in Visma, with Hgcapital stating it will invest a further £238 million ($309.5 million) in Visma. This puts the enterprise value of the total business at NOK45 billion ($5.3 billion), according to a release.
The deal will also see private equity major KKR & Co LP exit the firm with the sale of its entire stake in the software company for £1.4 billion pounds ($1.81 billion), resulting in a 3.2x return on its investment.
KKR initially acquired Visma in 2010 at an enterprise value of $1.3 billion. Since then, Visma has significantly grown revenues from NOK2.8 billion in 2010 to NOK7.9 billion in 2016, a compound annual growth rate (CAGR) of 19 per cent, and improved EBITDA margins from 19 per cent to 25 per cent.
The transaction is subject to customary regulatory approvals. The investment in Visma is primarily held in KKR’s third European fund. KKR was advised on this transaction by ABG Sundal Collier, Morgan Stanley, Simpson Thacher & Bartlett, EY and OC&C.
Another investor who saw an exit from the sale is Cinven, which will retain a minority stake in Visma. Cinven invested alongside KKR and HgCapital in a deal that saw each firm holding a 31.3 per cent equity interest.
Visma was identified as an attractive investment given its market leadership in the Nordic region its delivery of mission critical software to a wide customer base through a subscription model with high recurring revenues, and significant growth potential as customers migrate their legacy software applications to online cloud-based applications.
Anders Borg, Director and Head of the Nordic Region at KKR, said, “We are proud to have built a clear leader in the European software market over the past seven years. Visma has truly put the Nordics on the global tech map.”
In addition to this significant growth, the company has completed more than 100 add-on acquisitions over the same period of time for an aggregate enterprise value of c. $1 billion (NOK8 billion).
Øystein Moan, CEO of Visma, said: “KKR has been an outstanding partner over the past seven years to take Visma to the next phase of its development. Their support, engagement and strategic expertise from both global and local resources have been key drivers of the firm’s growth and success.”
GIC reportedly holds assets under management (AUM) of $353.6 billion as at 2016. According to its investment report for the 2015/2016 period, Europe accounts for 12 per cent of the funds’ exposure, with the UK accounting or 7 per cent of its total portfolio.