Hg investing more in Sovos – Global tax software provider Sovos says that Hg – a leading global software investor, partner and supporter of the expansion of Sovos for more than four years – will lead a further, majority investment in the company through the Hg Saturn 2 Fund (through which Hg Capital trust will be exposed to this deal). TA Associates, a leading global private equity firm with more than four decades of software investing experience, will also join as a significant minority investor to support the next wave of Sovos’ growth. Following this new investment, Sovos is poised to continue its geographic expansion, deepen its partner ecosystem, and respond rapidly to emerging tax and regulatory changes around the world.
Sovos has grown substantially since Hg first invested in the company in 2016. Since then, Sovos has acquired more than 10 companies across North America, Latin America and Europe; more than doubled its customer base to 8,000-plus, including half of the Fortune 500 companies; and added more than 1,000 employees working across 10 countries. With the continuity of support from Hg and the added resources and experience from TA Associates, Sovos will advance its initiatives in adjacent segments, as well as the overall growth strategy integral to its mission to Solve Tax for GoodⓇ everywhere its customers do business.
The terms of the deal, which is expected to close in the second half of 2020 pending regulatory approvals and closing conditions, were not disclosed. William Blair and Jefferies served as financial advisors to Sovos. Hg was advised by Goldman Sachs and Shea & Company, and TA Associates was advised by Barclays. Skadden and Kirkland and Ellis provided legal counsel and accounting and tax advice was provided by Ernst & Young and Deloitte.
Hg Capital Trust will invest approximately £40.8m in Sovos and will also realise estimated cash proceeds of approximately £139.2m on completion of this transaction from the sale of Hg Genesis 7’s investment and associated co-investment in Sovos. This would represent an uplift of £51.2m (58%) or 13 pence per share over the carrying value of £88.0 million in the NAV at 31 March 2020.
HGT : Hg investing more in Sovos