Target Information

HgCapital has announced the sale of 63.5% of its stake in Visma Holding, a premier provider of software and business process outsourcing (BPO) services operating in the Nordic region, headquartered in Oslo, Norway. This transaction is valued at an enterprise value of NOK 11.0 billion (£1.2 billion). Since HgCapital's initial investment of £82 million in 2006, the firm has strategically enhanced Visma's growth through multiple bolt-on acquisitions and additional capital investments totaling approximately £19 million. As a result, the return on capital invested delivers an internal rate of return (IRR) of 37% along with an investment multiple of 3.7 times original cost for HgCapital's clients. Following this deal, HgCapital's clients will retain a 36.5% stake in Visma, equivalent to 17.7% of the total company, which provides continued exposure to a leading provider of essential accounting, resource planning, and payroll software and related services for small and medium-sized enterprises in the Nordic market.

Industry Overview

The Nordic region's software and BPO services industry has seen substantial growth due to increasing demand for technology-driven solutions among businesses. The main drivers of this growth include the rise of digital transformation, the need for enhanced operational efficiency, and the trend toward subscription-based service models. As small and medium-sized enterprises embrace technology to streamline operations and improve service delivery, firms like Visma are positioned well to meet this evolving demand.

Moreover, regulatory changes in recent years have further fueled growth by encouraging companies to invest in compliant systems that can better manage accounting and payroll processes. The shift towards cloud-based software has also allowed BPO firms to expand their offerings, providing clients with scalable and flexible solutions. The growth of the Nordic economy, characterized by a highly skilled workforce and robust digital infrastructure, supports the ongoing expansion of the software industry.

Visma, as a leader in this market, has demonstrated resilience and strong performance, particularly during fluctuating economic conditions. The company’s strategic initiatives, combined with a favorable market landscape for technology solutions, have propelled both revenue and EBITDA growth significantly.

In summary, the Nordic software and BPO services sector is robust and poised for further growth, creating opportunities for existing players like Visma to capture additional market share and drive innovation.

Rationale Behind the Deal

This transaction aligns with HgCapital’s thematic investment strategy focused on sectors exhibiting growth potential. The TMT (Technology, Media, and Telecommunications) team identified subscription-based software as a lucrative area for investment, and their involvement has led to substantial value creation within Visma. By capitalizing on Visma’s strong market position and operational improvements, HgCapital successfully negotiated a favorable exit that not only realizes significant returns for its clients but also positions the company for continued growth under KKR's stewardship.

Information About the Investor

KKR is a prestigious global investment firm known for its extensive experience in the technology sector and its established presence in the Nordic region. The firm’s involvement in Visma signals confidence in the company’s long-term growth prospects. KKR emphasizes partnerships built on mutual interests and strategic alignment, ensuring that its investments are nurtured to maximize their potential.

An established player in the private equity landscape, KKR brings a wealth of resources and a network that can further enhance Visma’s operational capabilities. Their history of managing high-growth technology investments, combined with HgCapital's previous support, positions Visma well for scalable growth moving forward.

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The deal marks a strategic and advantageous exit for HgCapital, reflecting a strong investment thesis centered on the high growth potential of Visma in the Nordic software and BPO market. The impressive returns achieved, coupled with the ongoing stake retained by HgCapital’s clients, illustrates the success of their approach and positions all parties for future gains.

Given the current market dynamics and Visma’s operational achievements under HgCapital’s leadership—including impressive revenue growth, an expanding employee base, and a remarkable increase in EBITDA—this investment still holds considerable upside potential. KKR's entry into the partnership is likely to catalyze further development and leverage their global insights.

Furthermore, with the technological landscape continuing to evolve, the longevity of subscription-based revenue models serves as a strong underpinning for Visma, providing predictability in earnings. The ongoing support from both HgCapital and KKR enhances confidence in Visma's strategic trajectory and operational scalability.

Overall, this transaction exemplifies a sound investment for KKR and secures a robust foundation for Visma’s future, suggesting it could be an exemplary case of value creation in the private equity sector.

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