EQT to sell Utimaco majority stake to SGT Capital

The deal sees co-investors Pinova Capital and BIP Investment Partners sell their stakes in the business.

EQT will retain a minority stake in Utimaco, the GP said in a statement.

Unquote sister publication Mergermarket reported in January 2021 that Moelis had been mandated to advise on EQT's sale of Utimaco. Bloomberg previously reported that the company could be valued in the EUR 500m-1bn region, with a dual-track exit process under consideration.

The company posted EBITDA of EUR 18m and revenues in the EUR 70m-80m region, two sources told Mergermarket. The company was predicted to post 2021 EBITDA of EUR 20m. The company was marketed based on EBITDA of EUR 10m at the time of its acquisition by EQT in 2016, Mergermarket previously reported.

Mergermarket reported that any potential buyer would likely be based in Europe, due to the German government's laws regarding foreign investment in the defence and security sectors – although the company was likely to see higher valuations from US-based sponsors.

EQT acquired Utimaco in October 2016 from Pinova Capital, BIP Investment Partners and the company's management. Pinova and BIP invested part of the proceeds from the exit to retain a minority stake in the business, with BIP investing via its 2017-vintage BIP Fund.

EQT invested in Utimaco via EQT Mid-Market Europe, which held a final close in May 2017 on EUR 1.6bn. The fund backs mid-market companies with enterprise values in the EUR 100m-300m region.

During the investment period, Utimaco made five add-ons in the UK, the US and Germany, as well as acquiring Madrid-based RealSec in June 2021. EQT said in a statement that the company's revenues have tripled under its ownership.

The transaction remains subject to regulatory approval and is expected to close in Q4 2021.

SGT has offices in Singapore and Frankfurt. The firm was founded by Carsten Geyer, Joseph Pacini, Marcel Normann, Christoph Gerlinger, Jens Dino Steinborn, and Marianne Rajic. Geyer, Pacini and Normann previously held roles with London-headquartered alternative investment firm Xio Group.

SGT Capital merged with SGT German Private Equity in January 2021, forming a listed entity with a heritage portfolio of minority investments from the German Startups Group.

The firm targets mid-market companies in western Europe and Israel, as well as selective investments in the US. SGT aims to back companies with a top-three position in their respective industries, focusing on three core sectors: healthcare and medical technology; advanced industrials; and business services, data and analytics.

SGT is currently deploying equity via SGT Capital Fund II. The acquisition of Utimaco is the fund's first deal and will see the vehicle invest a three-digit-million euro amount, according to a statement. The deal will mark the first close of the fund, which has raised around USD 1bn in commitments to date and is expected to raise USD 1bn-3bn in total. The vehicle has a lifespan of 10 years.

Bain Capital Credit provided debt to back the deal, according to a statement from SGT.

Previous funding
Apax Partners took a minority stake in Utimaco in 1995, investing EUR 4.9m in the company, according to Unquote Data. The company listed on the Frankfurt Stock Exchange in 1999.

Investcorp acquired a 25% stake in Utimaco valued at around EUR 40m in February 2008, according to Unquote Data. The company was sold to UK-based security software provider Sophos later that year at an enterprise value of around EUR 217m.

Pinova Capital and BIP Investment acquired Utimaco from Sophos in an MBO in October 2013. Pinova deployed equity via Pinova Fund I, which held a final close in October 2010 on EUR 115m.

Company
Founded in 1983, Utimaco provides cybersecurity and compliance software and hardware security modules, providing functions including database encryption, cloud service architecture and Internet-of-Things component security. The business serves clients across sectors including financial services, the public sector, manufacturing and telecommunications.

The company is headquartered in Aachen in Germany and Campbell, California. The company has 470 employees and expects to post revenues of more than EUR 100m for the 2022 financial year.

People
EQT Private Equity – Florian Funk (partner).
Utimaco – Stefan Auerbach (CEO).
SGT Capital – Joseph Pacini, Carsten Geyer (co-managing partners).

Advisers
Vendor – Moelis & Company (corporate finance); Freshfields Bruckhaus Deringer (legal); PwC (financial due diligence, tax); Strategy& (commercial due diligence).
Equity – EY (commercial, technology & financial due diligence, tax); Willkie Farr & Gallagher (legal).

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• Exits
• Buyouts
• DACH
• Technology
• Secondary buyout
• EQT
• Germany