A pair of private equity investors are to become shareholders in a cloud software giant as part of a $12.2bn (£9.2bn) transaction that will mark the industry’s biggest-ever buyout.
Sky News has learnt that TPG and Warburg Pincus, the US-based investment firms, are to become small shareholders in Visma, a Norwegian company which supplies accounting, payroll, HR and other business software to more than one million small business customers.
The transaction will also see the Saturn 2 fund vehicle created by London-based Hg – Visma’s majority shareholder – acquire a further stake in the group from a number of existing shareholders.
Sources said that the deal was being led by Hg funds with a capital commitment from them of around $2bn, with new investors TPG and Warburg Pincus committing substantially smaller sums of several hundred million dollars each.
City sources said on Thursday that the deal would reinforce Hg’s reputation as one of the world’s most successful software industry investors.
It is expected to be announced on Friday morning.
Hg initially invested in Visma in 2006, when it helped to take the company private from the Oslo stock exchange at a valuation of about $450m (£340m).
It has since reinvested through a string of subsequent transactions, underlining its conviction that the soaring use of computing power will drive long-term demand for cloud-based business software.
The software group is now valued at well over 25 times that sum, making it Hg’s most lucrative investment ever.
Hg, which has exposure to Visma through its London-listed investment trust, also owns companies including A-Plan, an insurance distribution provider, and Cogital, an accountancy and business advisory group.
People close to the situation said that Visma’s workforce had grown from 2,500 people to more than 11,000 during the period of Hg’s ownership.
The appetite of new investors to buy shares at such an unprecedented valuation underlines their belief in Visma’s continued growth potential.
In the longer term, a stock market flotation is likely to prove an attractive option for Visma, with a clutch of international exchanges expected to compete to stage it.
The company’s revenues have surged during the coronavirus pandemic as SMEs have increasingly sought to manage their businesses remotely using more sophisticated software services.
In its second-quarter results, Visma said it anticipated increasing demand for software-as-a-service products as a consequence of the COVID-19 crisis, which would fuel further growth.
The deal makes TPG and Warburg Pincus the latest in a roll-call of buyout firms and other private capital providers which have been attracted to the stable cashflows generated by Visma’s success in selling its products to an army of small businesses in the Nordic region and beyond.
Various Hg entities, including the Saturn 2 fund, will continue to own more than half of Visma’s equity after the latest deal, one insider said on Thursday.
Among the other current shareholders are Singapore’s Government Investment Corporation and the Canada Pension Plan Investment Board.
Long-standing investors including private equity firm Montagu are expected to exit as part of this week’s deal, while others, such as General Atlantic Partners, have decided to increase their stakes.
Investment banks including Arma Partners, Bank of America Merrill Lynch, Goldman Sachs and Jefferies were among the firms which worked on the deal.
Hg, TPG and Warburg Pincus declined to comment.