Hg sells Citation to KKR

Katharine Hidalgo
20 August 2020

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Hg has sold business support service Citation to KKR.

KKR's investment is being made through its European private equity fund, European Fund V, which closed on €5.8bn in November 2019.

The firm will also be investing from its Global Impact Fund, which closed on $1.3bn. Citation's mission of helping SMEs look after the health, safety and wellbeing of their staff is aligned with its strategy for the impact fund, according to a statement.

The asset was expected to be marketed off more than £35m EBITDA and could be valued at £500m-600m or an EV/EBITDA multiple of 15-19x. First round bids were collected in March 2020, with bidders such as Permira and Providence also involved, according to Unquote sister publication Mergermarket.

The capital will go towards further growth opportunities, expanding its customer base and its range of services.

The company was an Hg 7 portfolio company. The fund closed on £2bn in April 2013 and has made several realisations to date, including Visma and Kinapse. During Hg's holding period, the company made eight acquisitions.

Previous funding
ECI acquired a majority stake in Citation in December 2012 in a management buy-in that valued the company at £50m. According to Unquote Data, ECI invested via its ninth fund.

In 2016, ECI Partners sold Citation to HgCapital, generating a 5x money multiple. HgCapital acquired a majority stake in the company alongside the existing management team.

Company
Citation helps SMEs to comply with relevant regulations and ensure certain levels of quality and standards are met, in areas such as health and safety, HR and employment law, ISO and industry-specific rules and standards by providing a combination of expert advice, software tools, and audits and assessments, mostly on a long-term subscription basis. Founded in 1995, the company is based in Cheshire and it generated £40m in revenue in 2018.

People
KKR – Tim Franks (partner, head, UK)
Hg – Joris Van Gool (partner).
Citation – Chris Morris (CEO).

Advisers
Vendor – Jefferies International (corporate finance); Deloitte (financial due diligence); OC&C (commercial due diligence); Weil Gotshal & Manges (legal); Addelshaw Goddard (legal).