BUSINESS DESCRIPTION

Ullink is a leading global provider of electronic trading applications and connectivity to the financial community. Founded in 2001, Ullink has grown quickly to become a global provider of multi‑asset trading technology and infrastructure. Ullink has over 2,000 customers from c. 40 countries with customers ranging from tier 1 global sell‑side brokers to regional niche specialists across Europe, North America and Asia Pacific. The business is headquartered in France, although c. 75% of staff and c. 90% of revenue are outside that country.

WHY DID WE INVEST?

Capital markets software has been a strong focus for HgCapital since 2002 and the TMT Team has followed Ullink since 2009. This investment is in line with HgCapital’s sector-focused approach of investing in leading global providers of vertical market application software. Ullink shares many of the core characteristics that HgCapital looks for: an excellent platform for growth; a subscription revenue model; and a diversified and loyal client base.

HOW DO WE INTEND TO CREATE VALUE?

Ullink has differentiated itself by offering a more modern and flexible trading system at a lower cost of ownership. HgCapital will help the business accelerate its strong organic growth, through increased new customer wins resulting from investment into the sales and marketing functions. We also believe there is an opportunity to consolidate smaller players in electronic trading, with the acquisition from The New York Stock Exchange of NYFIX and Metabit in September 2014, a significant step forward. The acquisition has given the business a broad international footprint and offers substantial opportunities to increase sales to the current customer base, as well as efficiencies in the cost base and shared infrastructure.

WHAT HAS BEEN ACHIEVED?

The acquisition of NYFIX and Metabit was transformative for Ullink and more than doubled the revenue of the business. Since then, the new management team, appointed in 2015, has been focused on the integration of the three businesses and realising the strategic value of the combination.

HgCapital is currently working with Ullink on the following initiatives: implementation of a new pricing plan; implementation of detailed customer satisfaction measures and account management; assessment of further M&A; and a review of segment profitability and drivers of margin and investment.

HOW IS IT PERFORMING?

The NYFIX and Metabit acquisitions have been well integrated into Ullink and its performance has substantially improved.

Investment was made in late 2015 into sales and research and development to drive increased revenue growth going forward.

We are seeing the benefit of this with stronger revenue and accelerated EBITDA growth. Ullink is highly cash generative and in May 2017 we returned £44 million to HgCapital clients, including £4.3 million to the Company, through a re‑financing representing a 43% return on the original investment.

A combination of strong trading, high cash generation and positive currency movements have led to an increase of £4.3 million in the Company’s valuation of its stake in Ullink over the first half of 2017.

HOW WILL WE CRYSTALLISE VALUE?

Ullink has a financial profile that is very attractive, with high levels of recurring revenue and organic growth, a scalable cost base and a high rate of cash conversion. We believe the company will be an attractive acquisition for both trade and financial buyers.

Sector Location Date of Investment Residual cost £’000 Unrealised Value £’000
TMT France Mar 2014 7,393 19,163