MML exits Waystone to Montagu, Hg for 11x money

The company is valued at USD 1.3bn.

The exit to Montagu was first announced in July 2021, with Hg newly joining the deal as a strategic investor. Both parties will hold a co-controlling stake in the business.

According to a statement, Hg and Montagu intend to continue to support Waystone's geographical and product expansion, including via targeted acquisitions.

As part of the deal, 50 members of Waystone's management will roll over their minority stakes, joining Montagu and Hg as co-investors.

MML formed Waystone via the merger of DMS Group, MDO and MontLake in June 2020, with the Waystone brand name in place since March 2021. MML invested in DMS in 2019, taking a 50% stake in a partnership deal, partner Richard Mayers and investment director Amar Shanghavi told Unquote.

The GP invested via MML Capital Partners VI, which held a final close in March 2016 on EUR 438m. The fund deploys equity tickets of EUR 10m-50m, investing in companies based in the UK, the US, and France.

The exit has returned 100% of the committed capital in MML Fund VI, MML said in a statement. The exit has also generated 164% IRR. MML VI has now made nine exits, Mayers and Shanghavi told Unquote, with another expected to be announced in Q1 2022.

MML is now deploying equity via MML VII; the fund held a final close in July 2021 on its hard-cap of EUR 670m and is around 50% deployed.

During the investment period, Waystone made two transformational acquisitions and seven further bolt-ons. CVC provided debt to support the add-ons, which saw the company expand its geographical presence to seven new territories and add to its service offering.

Further acquisitions are expected to be announced shortly as the company continues its growth, Mayers and Shanghavi told Unquote. Waystone's add-ons have mainly been sourced on a proprietary basis, with each company's management buying into the company.

The growth strategy saw the company's headcount grow from 170 to around 500 staff, with a 6x increase in EBITDA.

Montagu is deploying equity via Montagu VI, which held a final close in Q2 2020 on EUR 3.5bn. The GP generally invests in businesses valued at EUR 200m-1bn.

Hg is deploying equity via Hg Saturn 2. The fund held a final close in October 2020 on USD 4.85bn. The fund focuses on software and technology businesses, and holds investments in businesses including Visma and Hyperion.

Company
Waystone provides fund governance, and risk and compliance services for funds to the asset management industry. It serves asset managers that collectively mannage USD 1trn in assets, versus USD 350bn at the time of MML's initial investment in 2019. Founded in 2005, the company is headquartered in Dublin and employs around 500 staff.

People
Montagu Private Equity – Tobias Weltin (director).
MML Capital Partners – Richard Mayers, Robert Devonshire (partners); Amar Shanghavi (investment director); Bal Johal (CEO).
Waystone – Derek Delaney (global CEO).
Hg – Thorsten Toepfer (partner); Justin Von Simson (managing partner).

Advisers
Vendor – Baird, John Sun (corporate finance); Squire Patton Boggs, Julian Ciecierski-Burns (legal); Grant Thornton, Dara Kelly (financial due diligence); Oliver Wyman, Sean Farrar (commercial due diligence); Lockton, Calvin Barnes (insurance due diligence); EY, Ari Constantinou (IT due diligence).
Management – Liberty, Tim Thomas (corporate finance); Matheson, Padraic Roche (legal).
Equity – Raymond James, Stuart Sweeney (corporate finance); Linklaters (legal); PwC (financial due diligence).

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• Topics
• Exits
• Buyouts
• UK / Ireland
• Financials
• Ireland
• MML Capital Partners
• Montagu Private Equity
• HgCapital
• Secondary buyout