SD Worx minority stake sale process attracts PE interest

Morgan Stanley is in pole position to secure the sellside mandate, three of the sources said. A majority stake is not on offer as the company seeks to remain independent, one of the sources added. Preparations for a formal auction are underway, one of the sources added.

SD Worx reported EUR 120m of IFRS 16 EBITDA and EUR 860m of revenue for FY21 on the back of organic and inorganic growth, one of the sources said. IFRS 16 accounting rules allow for an add-back in EBITDA for costs related to leased assets, including rental payments.

In an interview with Unquote's sister publication Mergermarket last year, SD Worx's CEO, Kobe Verdonck, said that the company was planning to spend EUR 500m in acquisitions, and expecting to reach EUR 100m in EBITDA and to generate EUR 900m in revenue in 2021.

The company logged normalised EBITDA of EUR 64.3m in the first half of 2021, its annual report shows, up 16.5% from the same period the year before.

Financial sponsors are already spending time on the opportunity, one of the sources said. Hg's acquisition of German HR and payroll software provider Personal & Informatik in 2019 for EUR 2bn should provide buyers and the seller with a valuation benchmark, this source added. The sale of Zellis, the UK-headquartered peer, in 2017 to Bain Capital is another comparable deal, he added.

Last year, SD Worx snapped up three companies – Sweden-based peer Aditro, Netherlands-headquartered software provider Launch!, and Belgian software developer Teal Partners. It also divested ASPEX, selling the SaaS solutions provider to Belgian player Trustteam.

Headquartered in Antwerp, SD Worx has 5,500 employees. Its clients include Procter & Gamble, Costco, Puma, Hertz, Dutch clothing company Scotch & Soda, and Total.

Representatives for SD Worx and Morgan Stanley declined to comment.

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