Existing backer HgCapital Trust has demonstrated its faith in UK-based software group Iris subsequent to Iris’ decision to split into two separate operating businesses in March this year. The separation came about after CEO Martin Leuw resigned (see here). With a c£26.5m reinvestment, split between the two companies, PE house HgCapital now has a majority stake in both businesses, having bought out US PE house Hellman & Friedman.
HgCapital is crafting a portfolio around regulatory driven SME software – as well as Iris Accountancy Solutions (revenue of c£40m last financial year) and Iris Software Group (revenue of c£80M last year), it has invested in TeamSystem in Italy, and Visma in Norway (see Visma slips from Sage’s grasp – again). If it were to foster leverage across the portfolio it could cause waves in the sector and present Sage with a bigger problem.
We can’t quite pin down the specific reasons for the reinvestment. When we spoke to the management teams yesterday the message was that the business was split into two to drive faster growth and the HgCapital move further contributes to that aim. Revenue growth had been flat at the ‘old group’ so activity to stimulate new demand was a positive move. Evidently order intake and revenue is up within the ‘new’ businesses, and customers are confident enough to commit to multi year orders but the management teams came over all shy when it came to talking about numbers.
Growth is the prime goal for both companies naturally - in terms of revenue, customers and market share. Some of that will come organically, but as you would expect acquisitions are also a possibility.