HgCapital leads €4.7bn SBO of Visma from KKR, Cinven

Kenny Wastell
29 June 2017

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KKR has agreed to sell its entire stake in Norwegian enterprise software business Visma to a consortium of investors led by HgCapital, in a deal valuing the business at NOK 45bn.

A source close to the situation told unquote" that the deal values Visma at 22.2x its last-12-month EBITDA.

Cinven also sold 40% of its stake in the business via the transaction, with the consortium of acquirers also including Montagu Private Equity, Intermediate Capital Group (ICG) and Singaporean sovereign wealth fund GIC. A second source with knowledge of the deal told unquote" Cinven has now returned more than its initial investment in Visma to investors.

The first source told unquote" KKR generated a 3.2x return from its investment in Visma across its partial exits and dividends. The GP was invested in Visma via its third European fund, a €4.8bn vehicle that held its final close in June 2008.

According to a statement issued by HgCapital, the deal represents a 2.4x return on its most recent investment in the company in 2014, equivalent to an IRR of 36%.

The new consortium is investing a total of £1.4bn in equity (approximately NOK 15.2bn) in the latest deal, of which HgCapital is contributing £238m. Following the transaction, HgCapital will hold a 41% stake in the company and Cinven will hold a 17% stake, while Montagu, ICG and GIC will all hold undisclosed minority stakes.

The sale comes nine months after HgCapital, which already holds a minority stake in Visma, acquired the group's business-process outsourcing division Visma BPO. The carve-out reportedly gave Visma BPO an enterprise value of NOK 4bn and was the result of a decision taken by the parent group's decision to divest non-core assets.

According to unquote" sister publication Debtwire, the business recently raised a new NOK 2.75bn short-term debt facility maturing in 2019 comprised of a mixture of term loan A and term loan B. Citing a source familiar with the matter, the publication reported that Visma used the facility alongside proceeds from the Visma BPO sale to pay a dividend to KKR, HgCapital and Cinven. The incremental facilities reportedly took Visma's total debt including uncommitted facilities to NOK 15bn.

Since being acquired by Cinven, KKR and HgCapital, Visma has undertaken a pan-European acquisitive growth strategy, making more than 100 bolt-ons with an aggregate enterprise value of NOK 8bn. It is understood the company has also increased its focus on selling licenses – as opposed to individual software packages – which now account for 25% of its revenues, as opposed to 6% at the time of KKR's initial investment. According to statements issued by KKR and Visma, the business has increased its revenues from NOK 2.8bn to NOK 7.9bn since 2010, with its EBITDA margin also increasing from 19% to 25%.

The deal is subject to regulatory approval. At the time of publication, unquote" was awaiting a response from HgCapital regarding the debt package associated with the deal.

Previous funding
Visma has been under private equity ownership since 2006, when it was acquired in a NOK 4.32bn take-private by HgCapital 5. In October 2010, KKR acquired a 76.9% stake in the company, reducing HgCapital's stake to 17.7% in a NOK 11bn EV deal.

Four years later, Visma was valued at NOK 21bn when Cinven invested in the company alongside KKR and HgCapital, splitting the ownership stakes at 31.3% each, with management holding the balance.

Company
Headquartered in Oslo and founded in 1996, Visma is a provider of enterprise software focusing on HR, accounting and management systems.

People
KKR – Anders Borg, Stanislas de Joussineau (directors).
Visma – Øystein Moan (CEO).

Advisers
Equity (HgCapital) – Arma Partners (corporate finance); Lazard (corporate finance); Deloitte (financial due diligence); Skadden Arps Slate Meagher & Flom (legal); White & Case (legal); Bain & Company (commercial due diligence).
Equity (Intermediate Capital Group) – Ropes & Gray, Helen Croke, Malcolm Hitching, Alex Robb, Nicholas Matthew (legal).
Vendor (KKR) – ABG Sundal Collier (corporate finance); Morgan Stanley (corporate finance); Simpson Thacher & Bartlett (legal); EY (financial due diligence); OC&C (commercial due diligence).
Vendor (Cinven) – Freshfields Bruckhaus Deringer (legal).