Hg,
the Manager of HgCapital Trust plc ("HgT"), today announces a
recapitalisation of The Citation Group, an international provider
of tech-enabled compliance and certification solutions to small to
medium-sized enterprises. As part of the transaction The
Citation Group will welcome HarbourVest Partners, a global private
markets investment manager, as a new investor in the
business
The
terms of the transaction have not been disclosed and is subject to
customary conditions and regulatory approvals.
HgT,
whose shares are listed on the London Stock Exchange, gives private
and institutional investors the opportunity to participate in all
Hg's investments.
This
transaction values HgT's investment in The Citation Group at
approximately £45.1 million. This would represent an uplift of £3.5
million (8% or 0.8 pence per share) over the carrying value of
£41.6 million in the Net Asset Value ("NAV") of HgT at 30 September
2024. HgT will receive a net realisation of approximately £13.5
million from The Citation Group, having re-invested a portion of
its proceeds in the business alongside other institutional clients
of Hg. HgT's exposure to The Citation Group will be £31.6 million
at closing representing approximately 1.3% of NAV.
Note
that these figures only relate to HgT's share of Hg's overall
investment in The Citation Group.
Based
on the 30 September 2024 reported NAV, the pro-forma NAV of HgT is
expected to be £2.4 billion (or 523.6 pence per share). HgT's
available liquid resources, which includes the undrawn bank
facility of £277 million for future deployment (including all
announced transactions and the interim dividend paid in October)
are estimated to be £450 million (19% of the pro-forma 30 September
2024 NAV). The investment will reduce HgT's outstanding commitments
to invest in Hg transactions to approximately £649 million (27% of
the pro-forma 30 September 2024 NAV).
Citation welcomes new
investment from HarbourVest Partners
supporting its growth as a
global provider of SME compliance and certification
solutions
- HarbourVest Partners joins
forces with Hg and KKR to propel Citation's growth ambitions,
international expansion and innovation in AI.
- The strategic partnership
will back CEO Chris Morris and his team as they continue to support
the compliance needs of over 110,000 SME customers across the UK,
Australia and Canada.
London, UK - December 19, 2024:
The Citation Group (Citation), an international
provider of tech-enabled compliance and certification solutions to
small to medium-sized enterprises (SMEs), today announce that they
have welcomed HarbourVest Partners (HarbourVest), a global private
markets investment manager, as a new investor in the business. This
new chapter of investment will see HarbourVest join forces with the
management team and majority investors, KKR and Hg, to bolster
Citation's international growth trajectory - organically, through
product development in AI and through strategic
acquisitions.
Citation supports SMEs in the UK,
Canada, and Australia, acting as a critical partner for over
110,000 SMEs businesses navigating the complexities of HR, Health
and Safety, and Quality Certifications.
Chris Morris, CEO of Citation, said: "We're thrilled to welcome HarbourVest as our new strategic
partner. Their expertise, along with the continued support from Hg
and KKR, will be instrumental as we pursue our vision of
simplifying compliance for SMEs globally. Our focus remains on
providing peace of mind to business owners, allowing them to
concentrate on growing their enterprises, while we protect their
people, their businesses and their reputations."
This transaction follows a period of
sustained and rapid growth at Citation, in which the Group has
benefited from its leading quality and the breadth of its
mission-critical compliance solutions, as well as its hybrid
approach in leveraging both software and services to optimally
serve its customers' compliance needs. In the last four years,
Citation has entered Canada and Australia - now jointly
representing c.20% of revenue, and consistently stayed in excess of
"rule of 40" economics.
Gonçalo Faria Ferreira, Managing Director at HarbourVest,
said: "We are excited to become
a strategic partner to Citation, joining Hg and KKR to
support the Group's continued growth. Having followed the business
for several years, we are impressed by what Chris and his team have
achieved. We see strong potential for the business going forward as
it continues its mission to simplify compliance for
SMEs."
Joris Van Gool and Nick Jordan, Partners at Hg,
said: "Citation stands as a testament
to what can be achieved with the right team, technology and
strategic partners. The addition of HarbourVest to the fold marks
an exciting new phase for Citation, as we continue to unlock the
immense potential within the SME compliance space." Hans Arstad and Rami Bibi, Managing Directors
in KKR's European Private Equity and Global Impact teams,
added, "We're excited to welcome HarbourVest as Citation
continues its strong growth under Chris and the team. Together,
we'll further expand Citation's reach and enhance its offering
through strategic acquisitions and innovation, positioning the
business for continued success."
The transaction details have not been
disclosed. Jefferies acted as financial advisors to Citation Group,
Hg and KKR.
For
further details:
Hg
Tom Eckersley
+44 (0)208 148 5401
HgCapital Trust
Laura Dixon and George Crowe
+44 (0)20 8396 0930
Cadarn
Lucy Clark
lucy@cadarncapital.com
+44
(0)7984 184 461
Cadarn
David Harris
david@cadarncapital.com
+44
(0)7368 883 211
About
HgCapital Trust plc
HgCapital Trust plc, whose shares are
listed on the London Stock Exchange (ticker: HGT.L), gives
investors exposure through a liquid vehicle to a portfolio of
high-growth private companies in the software and services sector.
The selection of new investments and creation of value in these
businesses are managed by Hg, an experienced and well-resourced
private equity firm with a long-term track record of delivering
superior risk-adjusted returns for its investors. For further
details, please see www.hgcapitaltrust.com.
The
contents of the Hg, HgCapital Trust, KKR, The Citation Group and
HarbourVest Partners websites are not incorporated into, and do not
form part of, this announcement.