BUSINESS DESCRIPTION

Intelliflo is a leading UK SaaS provider of front and back office software solutions to SME IFAs, wealth managers, adviser networks, insurance/life companies and brokers. The business combines a decade-long track record in the UK market, with a best in class SaaS product and significant capability created by investment ahead of the Retail Distribution Review (RDR). Over 11,000 individual financial intermediaries and administrators use Intelliflo’s software on a daily basis to manage front and back-office workflows and to respond quickly to consumer and regulatory needs.

WHY DID WE INVEST?

This investment continues HgCapital’s strategy of partnering with great management teams in market-leading vertical application software companies.

Intelliflo has an attractive, scalable business model with a high component of recurring subscription revenues and strong, organic recurring revenue growth. There is the possibility of significant value creation through market share gains and cross-selling of new modules to existing customers.

HOW DO WE INTEND TO CREATE VALUE?

We have identified initiatives to improve sales and marketing processes, improve retention, accelerate product release cycles, reduce support costs and optimise pricing. HgCapital further intends to maximize the potential of the business by expanding Intelliflo’s product suite by new module development and partnership with complementary third party vendors.

WHAT HAS BEEN ACHIEVED?

The Mercury team has worked with the management team to implement a value growth plan across a number of areas, including: investment in sales and marketing capability, including a new inbound marketing platform; implementing best-in-class SaaS practices in technology development and operations; and strengthening Board capabilities.

HOW IS IT PERFORMING?

Intelliflo’s revenue has been broadly stable since acquisition, reflecting a shift in revenue mix to more valuable recurring subscription revenue. Significant investment into sales and marketing is impacting short-term EBITDA. We believe that, over the medium-term, this investment and increases in recurring revenues will drive significant growth in profit and equity value.

HOW WILL WE CRYSTALLISE VALUE?

Given the combination of Intelliflo’s end-user base, strong SaaS technology and natural positioning for cross-selling, the business should be attractive to a number of parties, including both UK and international trade and financial buyers.

Sector Location Date of Investment Residual cost £’000 Unrealised Value £’000
TMT UK July 2013 4,014 5,148