HGT Hg Capital Trust Plc

 

TIDMHGT 
 
RNS Number : 3166T 
HG Capital Trust PLC 
27 September 2010 
 

 
 
 
Set out below is the text of a press release issued today by HgCapital, which 
manages the investment portfolio of HgCapital Trust plc alongside those of other 
                             institutional clients. 
 
HgCapital has agreed to sell 63.5% of its investment in Visma for cash, and will 
following the transaction retain on behalf of clients 17.7% of the equity in the 
company.  HgCapital Trust plc, the listed investment trust which invests in all 
HgCapital's deals alongside its institutional clients, will immediately realise 
estimated cash proceeds of GBP39.1 million and continue to retain a stake in 
Visma valued at GBP22.5 million, providing further potential upside through 
ongoing exposure to Scandinavia's leading provider of regulatory-driven SME 
business software and BPO services. The total value of cash and the retained 
stake, GBP61.7 million, compares to a carrying value of GBP40.9 million in the 
Net Asset Value of the Trust at 31 August 2010, an uplift of GBP20.8 million 
(66.9 pence per share). Following completion of this transaction the estimated 
Net Asset Value of HgCapital Trust plc will be GBP312.8 million (1,005.7 pence 
per share*) and liquid resources are estimated to be GBP60.0 million (19% of the 
estimated Net Asset Value). The deal is subject to regulatory clearance with 
completion expected in November 2010. 
 
* Assuming all subscription shares in issue are exercised at their minimum price 
of 950 pence, the diluted Net Asset Value per share would be 996.4 pence per 
share. 
 
 
 HgCapital sells Visma to KKR at an Enterprise Value of NOK11.0 billion (GBP1.2 
                                    billion). 
 
London, 26 September 2010: HgCapital has today announced the sale of 63.5% of 
its stake in Visma Holding ("Visma"), the leading software and BPO services 
business in the Nordic region, based in Oslo, Norway to KKR at an enterprise 
value of NOK11.0 billion / GBP1.2 billion.  HgCapital invested GBP82 million in 
Visma in 2006 and has since then completed a number of bolt-on acquisitions and 
other strategic investments (c. GBP19 million additional capital invested). The 
return on all capital invested (including the unrealised stake) delivers an IRR 
of 37% and an investment multiple of 3.7x original cost for HgCapital's clients. 
 HgCapital clients will retain 36.5% of their stake in Visma (17.7% of the total 
business), providing further upside potential through an ongoing exposure to the 
number one provider of mission critical accounting, resource planning and 
payroll software and related BPO services to small and medium-sized enterprises 
in the Nordic region. 
 
This transaction represents another successful outcome driven by HgCapital's 
thematic sector investment approach.  HgCapital's TMT team identified 
regulatory-driven, subscription-based software in 2003 as an attractive 
sub-sector with scope for considerable growth over the following decade.  Over 
the past seven years HgCapital has completed five SME software investments 
operating in four geographic markets.  During the period, these HgCapital 
companies have also made more than 40 bolt-on acquisitions. Visma represents the 
fourth realisation by HgCapital in this sub-sector, having previously exited 
Iris in the UK for 3.4x cost / 60% IRR, Addison in Germany for 3.7x cost / 57% 
IRR and Computer Software Group in the UK for 2.1x cost / >500% IRR. 
 
Since the NOK4.3 billion (GBP382 million) public to private acquisition of Visma 
in 2006, HgCapital's TMT and Portfolio Management teams have worked closely with 
Visma's management to grow the business both organically and through 
acquisition.  Under HgCapital's ownership, Visma's EBITDA increased by over 265% 
from NOK320 million in 2006 to over NOK865 million forecast for 2010. During 
this period Visma also completed more than 25 bolt-on acquisitions and grew 
total revenues by an average of 16% per annum (with an average of 10% organic 
growth over the four year period).  Over the same period, operating margins 
improved from 14% to 20%, whilst Visma's operational performance proved 
resilient through the recent recession, with revenues and EBITDA growing by 11% 
and 23% respectively in 2009.  It is also worth noting that the number of 
employees increased from 2,512 to 4,200 under HgCapital's ownership. 
 
Visma management and employees will increase their ownership percentage in the 
business as a result of this transaction. 
 
The valuation multiple of Visma at exit is similar to that achieved by HgCapital 
on its three other realised SME software investments, which were all realised at 
multiples in excess of 12x current year EBITDA, reflecting the key features that 
HgCapital looks for in the businesses it acquires: a strong market position, 
growth, and high levels of recurring revenue, profits and cash-flow. 
 
Commenting on the realisation, Alex King, Head of the TMT team, stated: "We are 
delighted with the way Visma has developed over the past four years and we look 
forward to the management delivering further growth in the business with our new 
partners KKR.  We are also pleased to welcome KKR as a co-investor in Visma, 
since their global scale, and extensive experience in both the technology sector 
and the Nordic region makes them ideal partners. The ongoing success of Visma 
underlines the strength of HgCapital's sector-led investment approach and the 
support we bring as a partner to our portfolio companies." 
 
Nic Humphries, CEO of HgCapital, added: "Visma is the latest successful example 
of our ongoing investment focus on companies with predictable revenues, 
protected business models, platforms for growth and opportunities for 
performance improvement.  Our deep sub-sector knowledge enabled us to bring the 
knowledge of a trade partner to Visma's management, with the added flexibility 
and investment horizons of a financial buyer.  Our partial exit allows us to 
maintain exposure to the significant further upside that we see in Visma over 
the coming years.  It is another example of us backing strong, high growth 
businesses which generate more jobs even through the economic crisis in the 
so-called "knowledge economy" sectors in Western Europe." 
 
Oystein Moan, CEO of Visma said "We are very pleased to have a prestigious 
global firm such as KKR as a new key investor in Visma and look forward to 
continuing to grow in the future with their and HgCapital's continued support." 
 
Roger Mountford, Chairman of HgCapital Trust, said: "We are extremely pleased 
with this news from our manager HgCapital and the very positive impact it will 
deliver to the Trust's net asset value and liquidity. Strategically, it is 
highly beneficial for the Trust to realise for cash a part of its largest 
investment at an attractive price, while retaining a material exposure to a very 
successful company operating in a sector in which the manager has deep 
knowledge. The Trust continues to hold substantial liquid funds for deployment 
in new investments identified through HgCapital's strong sector focus." 
 
HgCapital and Visma were advised in this transaction by ABG Sundal Collier, 
Morgan Stanley and UBS. 
                                    - Ends - 
 
 
For further details please contact: 
+----------------------+------------------+------------------+ 
| HgCapital:           | Alex King        | +44 (0)20 7089   | 
|                      |                  | 7888             | 
+----------------------+------------------+------------------+ 
| HgCapital Trust:     | Roger Mountford  | +44 (0)20 7089   | 
|                      |                  | 7888             | 
+----------------------+------------------+------------------+ 
| Maitland:            | Neil Bennett     | +44 (0)20 7379   | 
|                      |                  | 5151             | 
+----------------------+------------------+------------------+ 
|                      |                  | +44 (0)7900      | 
|                      |                  | 000777           | 
+----------------------+------------------+------------------+ 
 
About HgCapital Trust plc 
HgCapital Trust plc is an investment trust whose shares are listed on the London 
Stock Exchange.  The Trust is a client of HgCapital, giving investors exposure 
to a portfolio of high-growth private companies, through a liquid vehicle.  New 
investments and existing portfolio companies are managed by HgCapital, an 
experienced and well resourced private equity firm with a long-term track record 
of delivering superior risk-adjusted returns for its investors.  The Trust has 
won the Investment Week Private Equity Investment Trust of the Year in 2005, 
2006, 2007, 2008 and 2009.   For further details, please see 
www.hgcapitaltrust.com 
 
About HgCapital 
HgCapital is a sector focused private equity investor in the European 
mid-market. The Partnership focuses on investments with enterprise values 
ranging from GBP50-GBP500 million.  Its business model combines sector 
specialisation with dedicated, pro-active support to portfolio companies and the 
corresponding management expertise across all phases of the investment process. 
HgCapital manages over GBP3 billion for some of the world's leading 
institutional and private investors.   For further details, please see 
www.hgcapital.com 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 DISPGUBCBUPUUMQ 
 

Hg Capital (LSE:HGT)
Historical Stock Chart
From Oct 2024 to Nov 2024

Hg Capital (LSE:HGT)
Historical Stock Chart
From Nov 2023 to Nov 2024