03 August 2010
HgCapital has agreed to acquire a majority stake in TeamSystem SpA on behalf of clients, including HgCapital Trust plc. The Trust, which is a listed investment trust giving private and institutional investors the opportunity to participate in all HgCapital’s investments, will contribute approximately £28.5 million, representing 15% of HgCapital’s total investment.
HGCAPITAL ACQUIRES TEAMSYSTEM, THE LEADING PROVIDER OF REGULATORY-DRIVEN SMB BUSINESS SOFTWARE IN ITALY
HgCapital, the European sector-focused private equity investor, has today announced the acquisition of TeamSystem SpA (“TeamSystem”), a leading software and services business based in Pesaro, Italy.
TeamSystem was founded in 1979 and is the #1 provider of daily use business applications to accountants and SMBs in Italy, delivering a range of business-critical software products to a diversified base of over 80,000 customers.
The acquisition represents a continuation of HgCapital’s thematic, sector-driven investment strategy, with TeamSystem being HgCapital’s fifth investment in the regulatory-driven SMB software market since 2004. HgCapital continues to seek out high quality European software companies who are clear market leaders in their field and show predictable revenues, protected business models, a platform for growth and opportunities for performance improvement.
HgCapital’s sector-focused approach continues to supersede geography in the targeting of new acquisitions, with deep domain knowledge driving targeted investment origination and enabling the TMT team to complete a series of attractive SMB software investments across Western Europe. Previous HgCapital investments in this sub-sector were Iris in the UK, Addison in Germany, Computer Software Group in the UK, and Visma in Norway. Prior to the acquisition of TeamSystem, HgCapital’s TMT team had pro-actively tracked the business since 2004 and, going forward, will continue to target similar European software companies with a strong subscription element who are clear market leaders in their field.
TeamSystem was acquired for an enterprise value of €565 million, representing 11.3x FY 2010 EBITDA. TeamSystem has traded strongly historically, achieving sound organic growth on a sustainable basis. HGT achieved core annual EBITDA compounded annual growth of 12.2% between 2001-9; and achieved core revenue compounded annual growth of 10.5% during the same period. HGT has proven resilient through the downturn, as the software it provides is business-critical for customers, rather than being a discretionary purchase. Continued growth is anticipated in the future.
The acquisition is anticipated to complete on the 30th September 2010. Following the completion of this investment, the undrawn commitments of HgCapital Trust plc to HgCapital managed Funds will be approximately £193 million, and cash and other liquid assets will be 7.5% (c. £21 million) of net assets.
Commenting on the investment, Alex King, Head of the TMT team, who will be joining the board, stated: “We are very pleased to acquire TeamSystem, after tracking the development of the business very closely for the past six years. HGT operates in a market segment we are extremely familiar with, and has a business model which closely resembles our prior investments in this segment. We look forward to helping management to drive HGT’s growth over the coming years, both organically and through select add-on acquisitions.”
Kai Romberg, a director in HgCapital's TMT team, who will also be joining the board, said: “I am delighted that we have concluded this transaction having built a relationship with management over the last six years. I, and the rest of the HgCapital team, look forward to working with the excellent management team to build value going forward and continue to grow the TeamSystem business.”
Nic Humphries, CEO of HgCapital, added: “This investment is another great example of HgCapital's investment strategy, which is to back high-growth businesses which create high quality jobs in the so-called "knowledge economy" sectors in Western Europe. TeamSystem is consistent with our previous investments in similar business models across four different countries in the last five years.