HIG prepares Conet for H2 2021 auction pipeline

The sponsor has appointed GCA Altium to advise, three of the sources said. The sale process could kick off after the summer, two sources confirmed.

Conet is being marketed based on EBITDA of around €25m, one source claimed.

The company reported an €18.1m EBITDA on the back of €148.2m in revenues in the financial year to 31 March 2020, according to its latest available filings. It forecasts €19.8m EBITDA and €170.5m in revenues for the following year to 31 March 2021 and said it expected a "noticeable but not significant influence" on its performance from the coronavirus pandemic, according to the filings.

Founded in 1987, Conet is an IT consultancy, IT systems integrator and software developer offering services such as SAP consulting, IT infrastructure and IP-based communications, according to HIG's website.

Conet also specialises in large digitisation and modernisation projects for various levels of public administration, according to its website. Its customers include German corporates such as Daimler, Deutsche Telekom and Siemens; public-sector bodies like the Federal Ministry for Economic Affairs (BMWi) and German Bundestag; and public security institutions such as Germany's armed forces and air traffic control.

While it is not a high-growth business, Conet's focus on serving public-sector clients ensures it sees steady cash generation and rarely loses customers, one source said. Still, its roster of customers in the defence sector such as the German armed forces could potentially raise ESG concerns among bidders, the source continued.

However, another source countered that Conet largely provides these customers with IT services for administrative purposes and has no direct connections to weapons or the military that would put off investors.

Conet's core services for the defence sector include websites based on its own content-management software, supply-chain management, and SAP software implementation projects, according to its website.

Headquartered in Hennef in the state of North-Rhine Westphalia, Conet has 1,000 employees, and offices in Germany, Austria and Croatia, according to its website.

HIG acquired a majority stake in Conet – at the time privately owned – in 2017 for an undisclosed sum. The company has completed a number of add-on acquisitions under HIG's ownership, including its acquisitions of German IT services Procon IT in 2019 and Act IT Holding in 2018.

One source drew comparisons to Conet with fellow SAP-focused IT systems integrators like sponsor-backed Valantic, and All for One, which has a market cap of €310.8m. DPE Deutsche Private Equity acquired a 74.86% stake in Valantic in 2019 for an enterprise value of €100m, according to Mergermarket data.

HIG declined to comment. Conet and GCA Altium did not respond to requests for comment.

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