Inflexion scores 7.7x on £140m Reward Gateway exit

Mikkel Stern-Peltz
29 July 2015

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Inflexion has reaped 7.7x money on the sale of British employee benefits and engagement software provider Reward Gateway to US private equity firm Great Hill Partners for ТЃ140m.

The GP reported an IRR of 59%, having acquired the company for £25m in December 2010, when it traded under the name Asperity Employee Benefits. The acquisition was made through the Inflexion 2006 Buyout Fund, an £165m vehicle with a 10-year lifespan.

Inflexion's exit concludes a period of ownership that saw two bolt-on acquisitions and a broadened product offering, as well as international expansion and staff numbers growing from 64 to 275. Revenues increased six-fold, while EBITDA grew ten-fold, according to DC Advisory, which advised Great Hill on the deal.

Reward Gateway's new US owners will support the company's plans to continue its expansion in North America, where it opened a first office last year.

As Reward's management and employees held a 40% stake in the business prior to the sale, the deal saw them reap an aggregate £6.5m. Management and staff will remain invested in the company, with a combined 45% stake.

TPG Capital provided a debt facility to finance the transaction.

The exit comes in the same month that saw Inflexion promote six investment directors to partner, including Christian Hamilton, who led the sale of Reward Gateway.

It is the first exit for Inflexion since the end of May, when it made a 3x return on the sale of CTC Aviation to NYSE-listed L-3 Communications in a deal worth £143m.

Company
Reward Gateway is an enterprise employee engagement software provider headquartered in London and founded in 2006 as Asperity Employee Benefits.

The company's software-as-a-service suite covers employee benefits, reward & recognition, total reward solutions, employee communications and engagement systems, with clients including IBM, American Express and Diageo.

Reward Gateway employs 275 people and operates in the UK, Australia and the US. It posted revenues of £188m last year.

People
Inflexion partner Christian Hamilton led the sale for the GP. Glen Elliott is the founder and CEO of Reward Gateway.

Advisers
Vendor – Robert W Baird, David Silver, Peter Augar, Paul Bail (Corporate finance); Jones Day (Legal).
Acquirer - DC Advisory (Corporate finance); Kirkland & Ellis (Legal).
Management - Cavendish Corporate Finance (Corporate finance); Squire Patton Boggs (Legal).
Debt - Macfarlanes (Legal).