Advised IRIS, a leading provider of business-critical software to the UK accountancy, education and SME sectors, on its recapitalisation by ICG and Hg Saturn Fund
May 2018
(A portfolio company of Hg)
recapitalisation by
$1,736 million
  • Sector: Application Software
  • Deal Type: Private Equity Deals
  • Engagement type: Sellside
  • Size: $1,736 million
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Arma Partners is pleased to announce that it has acted as exclusive financial advisor to IRIS on its recapitalisation by ICG and Hg Saturn Fund, who will both acquire joint partnership stakes in IRIS from majority shareholder Hg6 Fund. The transaction represents the UK’s largest ever and Europe’s third largest ever private equity led software buyout, at an enterprise value of approximately £1.3 billion.

IRIS is a leading provider of business-critical software to the UK accountancy, education and business markets. Over 21,000 accountancy practices and more than 80,000 small and mid-sized businesses, corporates and payroll bureaus rely on IRIS to run their business every day. IRIS has consistently delivered exceptional financial performance over decades and across economic cycles, growing both revenue and EBITDA at a CAGR of 17% since 2002 driven by deep domain knowledge as well as a good breadth and depth of functionality across its product portfolio. The company is uniquely positioned in the European software ecosystem with a strong product offering, a loyal customer base, superior software metrics with high degrees of recurring revenue and cash flow conversion, and a proven M&A platform with significant cross-sell opportunities.

This is the second £1bn+ European software sell-side transaction Arma Partners has advised on this year, after the recapitalisation last month of TA Associates-backed enterprise software business The Access Group. Following the recent recapitalisation of Visma by Hg, GIC, Montagu and ICG last year valued at $5.3 billion (Europe’s largest ever software buyout), in which Arma acted as financial advisor to the buying consortium, these transactions further underscore the firm’s unrivalled expertise in delivering highly successful outcomes on landmark technology transactions.

-Founded in 1978, IRIS is a leading provider of business-critical software to the accountancy, education and SME sectors.

-Its solutions serve over 21,000 accountancy practices and more than 80,000 small and mid-sized businesses who also use its bookkeeping, payroll and HR software solutions.

-The company is uniquely positioned in the European software ecosystem with a strong product offering, a loyal customer base, superior software and financial metrics and a proven M&A platform.

-IRIS has consistently delivered exceptional financial performance over decades and across economic cycles, growing both revenue and EBITDA at a CAGR of 17% since 2002.

-ICG is a London-based specialist asset manager, founded in 1989, investing across the whole capital structure. ICG is listed on the London Stock Exchange and has offices around the globe.

-ICG offers various financing solutions such as equity investments, financing with outside capital, and mezzanine financing.

-Hg is a sector expert investor focused across the technology, services and industrial technology space, primarily in Europe. Hg has funds under management of over £9 billion serving some of the world’s leading institutional and private investors.

-Hg Saturn Fund, which had its first close in early 2018, focuses on software businesses with an enterprise valuation of more than £1bn.

-ICG and Hg Saturn co-led the new investment into IRIS with Hg having been a key shareholder for 14 years, increasing its ownership in 2011 and rolling its stake in 2015.

-With a strong core business, proven history of TAM expansion and continued investment in technology, IRIS is well positioned to accelerate its growth both through organic growth investments and further acquisitions.

-Through their partnership, ICG and Hg Saturn will support IRIS to drive further growth both organically in its core markets by further upselling & cross-selling its products, and through bolt-on and transformational M&A, which will allow IRIS to further consolidate its existing target markets and expand into new verticals.

-Arma Partners has forged a close relationship with IRIS over several years, having previously advised on its recapitalisation in 2015.

-Arma Partners was engaged to advise on the sale and provide comprehensive deal support including strategic positioning, preparation of marketing materials, financial analysis, valuation, counterparty outreach, deal tactics and execution.

-Arma Partners ran a narrow, highly tailored sale process involving both traditional PEs and alternative capital providers to deliver a transaction within an accelerated timeframe.

-The transaction demonstrates Arma Partners’ deep expertise in the application software space and further underscores the firm’s strong momentum and unrivalled expertise in delivering highly successful outcomes on landmark technology transactions.