TPG and Warburg Pincus’ $12bn Visma deal

November 2020 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

November 2020 Issue

Warburg Pincus and TPG have agreed to invest in Norwegian software developer Visma, valuing the company at $12.2bn, including debt, in one of the European technology industry’s biggest deals this year.

Under the terms of the agreement, the US private equity firms will acquire minority stakes in Visma. The company’s biggest shareholder, European buyout firm Hg, is also reinvesting in the business and will put up most of the new capital, it said in a statement announcing the deal.

The transaction will also see the Saturn 2 fund vehicle created by London-based Hg acquire a further stake in the group from a number of existing shareholders. Hg’s overall stake in the business will rise to 54 percent following the transaction. Canada Pension Plan Investment Board and General Atlantic are increasing their holdings in Visma, while London-based Montagu Private Equity sold its entire investment through the transaction.

Visma, a software as a service (SaaS) company, offers a suite of accounting, payroll, HR and other business software products to more than 1 million SME customers across the Nordic, Benelux and Baltic regions.

“For almost 15 years now, Visma has benefited from a supportive and highly knowledgeable private equity investor base,” said Merete Hverven, chief executive of Visma. “Their guidance and know-how in the software sector has enabled us to consistently expand both our product offering and geographic footprint. This includes a significant investment in cloud computing which has strengthened both our customer and shareholder value.

“As we continue to invest in world-class technology, including new areas of innovation such as AI and machine learning, we warmly welcome this new investment,” he continued. “We also highly value the support we continually receive from our existing investors. We look forward to continuing Visma’s strategy to create a fully online ecosystem for businesses across Europe.”

“Visma is Europe’s biggest success story in cloud software for businesses,” said Nic Humphries, senior partner and head of the Hg Saturn team. “This is a result of consistent investment in SaaS technology by Øystein Moan, Merete Hverven and their world-class team.

He continued: “Today we’re as excited as we’ve ever been about the future prospects of the business. Most recently, covid-19 has demonstrated the power of Visma’s cloud solutions – empowering businesses to stay connected and continue working through the crisis. We’re also delighted to welcome new investors, who join the other strategic investors already supporting Visma across the globe.”

Hg, which is one of the biggest backers of private software businesses in Europe, initially invested in Visma in 2006, when it helped take the company private from the Oslo stock exchange at a valuation of about $450m. Visma has over 11,000 employees, including 4000 software developers who serve over 1 million business customers. Demand for SaaS has resulted in uninterrupted, year-on-year revenue and earnings before interest taxes, depreciation and amortisation (EBITDA) growth over the last 15 years of 19 percent and 23 percent compound annual growth rate (CAGR) respectively.

Visma has completed deals for a number of companies over the last 12 months, including Circle Software, Onguard, FirstAgenda, 1st Web, Draftit, Specter, Nmbrs, Zetech and Yuki.

It has since reinvested in the business several times. Singapore state investment company GIC Pte is also an investor in Visma.

Hg had been intending to sell part of its stake in Visma earlier in the year, however the COVID-19 pandemic forced the firm to put its plans on hold before reviving them over the summer.

Goldman Sachs Group Inc., Bank of America Corp. and ABG Sundal Collier Holing ASA worked on the sale. The incoming investors were advised by Arma Partners LLP, Jefferies Financial Group Inc. and Carnegie Investment Bank AB.

Richard Summerfield