(Bloomberg) — Hg has agreed to buy a stake in a group of cloud software providers owned by EQT AB, in a deal valuing the operations at $10 billion.
Under the terms of the transaction, EQT will sell a large part of its holdings in IFS and WorkWave to Hg, the private equity firms said in a statement Wednesday that confirmed an earlier Bloomberg News report.
Stockholm-based EQT will remain a majority shareholder in the businesses alongside Hg and fellow backer TA Associates. TA will also sell a portion of its stakes to Hg, according to the statement.
“The new investment will give us a fresh pair of eyes,” said Johannes Reichel, a partner within EQT’s advisory team. “Also, for companies that have become so large and an IPO is not around the corner, a stable shareholder structure gives us optionality.”
IFS makes online enterprise resource planning tools that help companies oversee their manufacturing, employee management, finance and supply chain.
“Our view has always been we need to find sectors that are not affected by macroeconomic or geopolitical events,” said Nic Humphries, senior partner at Hg. “You have to pay taxes, pay your employees, pay your bills in all economic environments.”
EQT acquired IFS in 2015 using money from its VII fund. In 2020, it transferred the investment into newer funds in a deal that saw TA come on board as an investor. The following year, the owners decided to split out WorkWave as a separate portfolio company.
WorkWave offers enterprise software-as-a-service to companies in the field services, transportation and logistics industries. IFS had bought the business in 2017.
“I believe we have only seen the beginning of IFS’ and WorkWave’s growth trajectories,” said Per Franzen, head of private capital at EQT.
Private equity firms and institutional investors have been clamoring over SaaS providers, drawn to their strong growth trajectories and sticky revenue streams. Recent high-profile deals in the sector have included Carlyle Group Inc.’s buyout of Swiss industrial software maker AutoForm AG, and new investors buying into Hg-owned Visma AS.
Elsewhere, Ardian SAS is considering a sale of Italian health-care software provider Dedalus, which could attract financial investors and be valued at more than 3 billion euros ($3.3 billion), Bloomberg News reported this month.
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