Hg eyes exit from software and services group IRIS

Discussions of a sale are nascent and sellside advisors have not yet been appointed, the sources said.

The asset, which is one of Europe’s largest software providers, is expected to be marketed off annual EBITDA in excess of GBP 110m, a further source familiar said. The firm currently books around GBP 90m of EBITDA, the first source said. IRIS could fetch a GBP 1.5bn enterprise value, a fourth source noted.

It is unclear whether co-owner Intermediate Capital Group (ICG) will also look to exit. ICG acquired a stake in IRIS in May 2018, when Hg reinvested in the company via a fund-to-fund transaction, through which its stake was transferred to its Saturn vehicle from the Hg6 Fund. IRIS was valued at GBP 1.3bn at the time of the transaction, which was then the UK’s largest-ever private equity-led software buyout, according to a press release.

Given the size of the asset, it is somewhat unlikely that a sole private equity sponsor would acquire IRIS, an advisor familiar with the company said. Sponsors could seek to join forces with passive minority investors in the form of pension and sovereign wealth funds, the advisor added. Still, certain large-cap financial sponsors, including KKR, could underwrite the ticket by themselves, the advisor added.

Since Hg and ICG’s takeover, IRIS has executed 12 bolt-on acquisitions, seven of which were completed last year, according to Mergermarket coverage. IRIS most recently acquired AccountantsWorld last month, as reported.

Founded in 1978 and headquartered in the UK, IRIS provides business software and services to companies in the accountancy, education and business markets. The firm is the fourth-largest software group in Europe, according to Hg.

Hg declined to comment. ICG did not respond to a request for comment.

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• Topics
• Exits
• Technology
• UK / Ireland
• HgCapital
• Intermediate Capital Group PLC