Hg buys majority stake in Waterland-backed Serrala

Waterland and Serrala's founding family are to retain significant minority stakes in the company following the deal.

Unquote sister publication Mergermarket reported in March 2021 that Serrala was to be put up for sale, with Deutsche Bank mandated to run the process. Sources told the publication that the company posted revenues of around EUR 100m and EBITDA in the EUR 10m-EUR 15m range.

In May, Mergermarket reported that Astorg, Hg and TA Associates were expected to place indicative bids for Serrala. Based on a revenue forecast of EUR 120m, the company was expecting a valuation of more than EUR 1bn, although it would more likely be valued in the EUR 500m-EUR 600m region if EBITDA were used to calculate its enterprise value.

Mergermarket reported in July 2021 that the Carlyle Group had been one of the remaining sponsors involved in the auction process, although the GP had since withdrawn. Although around 40 parties had been invited to submit bids, the seller's pricing expectations had caused many to leave the process, Mergermarket reported.

Waterland acquired Serrala (then known as Hanse Orga) in 2016. The GP deployed equity via Waterland Private Equity Fund VI, which held a final close in April 2015 on EUR 1.55bn. The fund was 77% deployed as of June 2020, according to Unquote Data.

Waterland VI made its first realisation in July 2020, selling its stake in Belgium-based compliance software Enhesa to CGE Partners.

Under Waterland's ownership, Serrala made add-ons including e5 Solutions Group, Tembit Software and Dolphin Enterprise Solutions. The acquisition of Amsterdam-based AcceptEasy marked the company's fifth add-on in February 2020.

Hg is investing via Hg Genesis 9, which held a final close in October 2020 on EUR 4.4bn, exceeding its EUR 3.3bn target. The vehicle invests in companies with enterprise values of EUR 500m-EUR 1.5bn, investing around EUR 200m-EUR 600m per deal. The fund targets software and technology services companies in Europe.

Hg's listed vehicle, HgCapital Trust, has invested GBP 24m alongside Hg Genesis 9.

The GP has made several investments in the B2B software sector, including Visma, which the GP initially acquired in a take-private in 2006. Hg's current investments in the B2B finance automation sub-sector include Canada-based Prophix, which Hg acquired in January 2021.

Company
Founded in 1984 and headquartered in Hamburg, Serrala is a software platform that aims to facilitate the automation of B2B financial processes, creating a digital 'Office of the CFO'. Its software aims to reduce the risk, cost and time associated with processes such as invoicing, outgoing payments and cash management.

According to its latest publicly available accounts, Serrala posted 2019 revenues of EUR 36m, versus EUR 37.7m in 2018. Its 2019 EBITDA stood at -EUR 3.4m, versus -EUR 1.4m in 2018. However, the company currently posts revenues of EUR 100m, according to Mergermarket.

The company has 700 employees, versus a headcount of 250 at the time of Waterland's investment.

People
Waterland Private Equity – Gregor Hengst (partner).
Serrala – Sven Lindemann (CEO).
Hg – Stefan Magolis (partner).

Advisers
Equity – Latham & Watkins (legal).
Vendor – Hengeler Mueller (legal); EY (financial due diligence).

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