Hg buys Financial Express and sells JLA – Hg, the manager of HgCapital Trust plc, has announced an investment in Financial Express, a leading data, analytics and software vendor focussed on the European retail investment funds market. The terms of the transaction were not disclosed. HgCapital Trust plc will invest approximately GBP7.5 million in FE, with other institutional clients of Hg investing alongside it through the Mercury 2 Fund.
Founded by Michael Holland and Craig Wilson, FE is a leading provider of investment data, research and software to the financial services industry in the UK and operates a proprietary database of complete retail funds data with global coverage and history, built up over 20 years. Trusted by hundreds of thousands of investors, advisers, asset managers and platforms who use FE data, software and investment advice every day, FE is a leading player in supporting the UK fund industry.
The investment will be made from the Mercury 2 Fund. FE has a number of business characteristics that Hg looks for, including a strong position in the wealth / asset management software and data sector, a well-recognised brand, mission-critical products, and a strong management team led by Neil Bradford.
The investment comes on the back of significant expansion of FE’s global operations and product offering over the past few years, and another year of record growth for the company in 2017.
Sebastien Briens, Partner at Hg, said: “We have been following FE for a number of years, and have been impressed by the strength and depth of its data, products, team and vision. We are very pleased to partner with Michael, Craig and Neil in the next stage of growth for the business.”
Neil Bradford, CEO at FE, said: “Hg’s track record and experience in our sector means they are the perfect partner to continue FE’s growth strategy and international expansion ambitions. We look forward to working with the Hg team.”
Michael Holland, co founder of FE, said: “Data is at the foundation of everything we do and Hg has a deep understanding of the fund data space. I am confident that this partnership will hugely benefit our clients.”
JLA disposal
The sale of JLA delivers a c. 4.9x investment multiple and a c. 26% gross IRR over the investment period. This transaction values the company’s investment in JLA at approximately £34.2m. This would represent an uplift of £7.7m (29%) over the carrying value of £26.5m in the NAV at 30 April 2018. Based on the 30 April 2018 reported NAV (including all transactions announced to date and the resulting revaluation of the carried interest provision), the pro-forma NAV of the Trust is expected to be 1,926.2 pence per share.
JLA more than doubled in size during Hg investment, successfully developing new product categories and significantly growing total employment.
JLA provides equipment, supply and services solutions across commercial laundry, catering, heating and fire safety to customers across the UK, primarily through its ‘Total Care’ offering. Total Care provides customers with a hassle-free solution for running critical areas of their business, minimising downtime and maximising peace of mind for business owners. Hg’s Services team invested in JLA at the beginning of 2010, identifying JLA as a ‘hidden champion’ services business. JLA displays best-in-class services characteristics: stable and predictable revenue streams, growth from both existing and new customers, and a wide customer base with high customer satisfaction levels. Since 2010, in addition to the organic development of new product offerings in the Catering, Heating and Fire Safety markets, JLA has successfully completed 16 bolt-on M&A transactions. During this time the business has more than doubled in size, with employment increasing from 310 to 900 across the UK.
Thorsten Toepfer and Joris Van Gool, Hg, said: “JLA has been a strong performing business, displayed by its 25 year-on-year unbroken growth track record. Hg has supported management to enable this growth during our 8-year investment period, including a variety of operational projects covering new product development, digital marketing and acquisitions. Hg’s investment returns have been driven by the combination of impressive revenue and EBITDA growth, as well as accretive M&A delivered by a world-class management team. We have really enjoyed working with the JLA team and we wish them well as they continue their success.”
Stephen Baxter, CEO of JLA, said: “JLA has enjoyed an incredibly successful period during our partnership with Hg. The operational projects we have undertaken together have proved valuable, whilst the M&A activity has helped expand and diversify our services. We look forward to working with Cinven, who we’re confident will help us maintain this momentum and continue JLA’s future growth.”
HGT : Hg buys Financial Express and sells JLA