BUSINESS DESCRIPTION

Visma is a leading provider of mission critical business software to SMEs in the Nordic region and the Netherlands. Headquartered in Oslo with significant revenues in Sweden, Finland, Denmark and the Netherlands, the company provides accounting; resource planning and payroll software to its customer base of over 600,000 enterprises. In September 2016, Visma announced the sale of Visma BPO, its outsourcing services business, for NOK 4.1 billion (c. £380 million) to HgCapital 7, forming part of the newly launched CogitalGroup.

WHY DID WE INVEST?

Visma was an early example of HgCapital’s focus on recurring revenue, business critical application software companies serving SMEs and their advisers. The company enjoys high levels of predictable, recurring revenue resulting from a subscription payment model. When HgCapital first invested, in 2006, both organic and acquisition driven revenue growth opportunities were identified, as well as significant opportunities to increase profit margins.

HOW DO WE CREATE VALUE?

Visma has consistently exceeded our investment plans. In April 2014, following a decision by majority owner KKR to sell part of its original 2010 stake in Visma, HgCapital decided to sell its remaining stake, generating a total return between 2006 and 2014 of 5.2x original cost and a gross IRR of 33%. HgCapital clients then re invested £409 million in the business for a 31% stake, via the HgCapital 7 fund and co‑investment, as a co-lead investor, alongside KKR and Cinven. This valued the business at a total EV of NOK 21 billion (£2.1 billion). In 2017 HgCapital announced a further investment into Visma following the sale of KKR’s stake valuing the business at NOK 45 billion (£4.2 billion) The continued reinvestment in Visma reflects our conviction in the continuing strength of the business, backing a management team we know well with a strong track record of creating value for investors.

WHAT HAS BEEN ACHIEVED?

Since our first investment in 2006, Visma has acquired over 120 companies, notably: Mamut ASA, a provider of ERP software to small customers in Norway (2011); Netvisor, a provider of SaaS based ERP software to the Finnish small customer segment (2011); Agda, a Swedish provider of payroll software to SMEs (2012); InExchange, a Swedish e-invoicing leader (2013); Huldt & Lillevick, a payroll provider to SMEs (2014); e-conomic / SpeedLedger (2015); TripleTex, a Norwegian SaaS micro ERP player; EasyCruit, recruitment software solutions (2016); and Bluegarden, a leading payroll player in Denmark with a presence across Scandinavia due to complete in the second half of 2017. These deals strengthened organic growth from innovation in new products, as well as driving margin improvement through a reorganisation of Visma’s internal processes. Visma is now positioned as one of the leading and largest SaaS companies in Europe, with above NOK 2 billion of pure SaaS revenues.

HOW IS IT PERFORMING?

Visma continues to see strong double-digit growth in revenue and EBITDA. Over the 11 years that HgCapital has been invested in the business, Visma’s revenues and EBITDA have seen a compound annual growth of 17% and 23% respectively.

Following the announced realisation and further re-investment by HgCapital, the Company’s valuation of its stake in Visma has seen a material increase of £31 million over the first half of 2017.

HOW WILL WE CRYSTALLISE VALUE?

Visma has a scale and growth profile which would make it an attractive candidate for an initial public offering ('IPO') or a large ‘private IPO’, where multiple larger institutional or sovereign wealth-type investors could choose to invest in the business.

Sector Location Date of Investment Residual cost £’000 Unrealised Value £’000
TMT Scandinavia Aug 2014 41,396
112,140