IK Partners likely Conet buyer as HIG Europe concludes sale

Patrick Costello , Maryna Irkliyenko and Johannes Koch
22 October 2021

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IK Partners has been tipped to win HIG Europe's auction of Conet Technologies, a German IT and software development company, according to three sources familiar with the situation.

The sponsor submitted a 15x EBITDA offer to acquire Conet, two of the sources said. IK is basing its multiple on a forward-looking EBITDA of EUR 25m, according to the first source, noting that the offer is roughly EUR 40m higher than those submitted by runner-up bidders.

Two other unidentified sponsors also made it to the auction's final stage, the third source said.

With its Mid Cap funds, IK typically invests in "established mid-market businesses" valued from EUR 150m to more than EUR 1bn via majority buyouts, according to its website.

Comparable companies in the space have traded at similar multiples, one of the sources said. While Conet is not as high-growth an asset as other IT consultancies, it generates "high-quality" revenue and is a very stable business, the same source continued.

HIG was set to collect bids for the company on 15 September, with interest running high among mid-cap private equity firms, as previously reported by Mergermarket. GCA Altium was advising on the process.

Conet reported EUR 18.1m EBITDA on the back of EUR 148.2m revenues for the financial year to 31 March 2020, according to its latest available filings. It forecast EUR 19.8m EBITDA and EUR 170.5m in revenues for the following year, to 31 March 2021, and said it expected the coronavirus pandemic would have a "noticeable but not significant influence" on its performance, the same filings state.

HIG acquired a majority stake in Conet in 2017 for an undisclosed sum. Under HIG's ownership, Conet completed a number of add-on acquisitions, including German IT service providers Procon IT in 2019 and ACT IT Holding in 2018.

Earlier this year, HIG exited Infinigate, a Swiss-based cybersecurity specialist, selling its majority stake in the company to Bridgepoint in a deal estimated to be valued at EUR 200m-400m.

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.

Conet is headquartered in the state of North-Rhine Westphalia and has around 1,000 employees. Comparable companies include fellow SAP-focused IT system integrators such as DPE-backed Valantic and All for One.

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