Business description

Established in 1996, Visma is a leading provider of mission-critical business SaaS, software and outsourcing services to small and medium-sized enterprises in the Nordic region and the Netherlands. Headquartered in Norway, the company provides accounting, resource planning and payroll software, outsourced bookkeeping, payroll services and transaction process outsourcing to its customer base of over 400,000 enterprises.

The deal

HgCapital had completed a number of SME business software investments in Northern Europe prior to Visma and were invited in by the management in response to a contested public-to-private bid from a trade player. HgCapital worked closely with management to complete the NOK 4.3 billion (£382 million) public-to-private transaction from the Oslo Stock Exchange in May 2006.

In December 2010, HgCapital completed the partial sale of 63% of their investment in Visma to KKR, valuing the company at an enterprise value of NOK 11 billion. HgCapital retained 17% of the total business remaining actively involved on the board, and continuing to support management alongside KKR.

The investment rationale

Visma was an early example of HgCapital’s focus on recurring revenue, business critical application software companies focused on SMEs and their advisors. The company enjoys high levels of predictable recurring revenue resulting from a subscription payment model.

At the acquisition in 2006, both organic and acquisitive revenue growth levers were identified, as well as significant opportunities to increase profit margins that were below those of most of its competitors. This was in part due to significant R&D investment in the business and a delay in the benefits expected from these investments and from a number of recent acquisitions.


How HgCapital supported Visma

Since 2006, HgCapital and, subsequently, HgCapital and KKR have worked closely with Visma’s management to grow the business. Oystein Moan (CEO) and Tore Bjerkan (CFO) had grown Visma from a small public company which they took-over in 1997 and their track record was already proven and exemplary. HgCapital’s job was to give them the freedom and backing to allow them to continue to do a great job as entrepreneurial managers. They didn’t want interfering financial-types, they wanted an industry-experienced investor who understood the software business, would build trust over time and provide support in areas that could help Visma grow.

HgCapital supported management with experienced project and strategy executives who could help implement initiatives to boost revenue growth: implementing group-wide Net Promoter Score programs to boost customer satisfaction and enable cross-selling; converting one-time revenues to recurring subscription packages which enhance future upsell potential and investing in cloud-based technology. Visma has completed more than 75 bolt-on acquisitions, notably: Mamut ASA, a provider of ERP software to small customers in Norway (2011); Netvisor, a provider of SaaS based ERP software to the Finnish small customer segment (2011); Agda, a Swedish provider of payroll software to SMEs (2012); and InExchange, the Swedish e-invoicing leader (2013). Visma is now positioned as one of the leading and largest SaaS companies in Europe with over €80m of pure-SaaS revenues; employment levels across the firm have grown from 2,512 in 2006 to 5,648 currently.


Visma’s performance over the eight years since 2006 has been consistently robust, which underpinned HgCapital’s decision to retain a minority stake in 2010, and which provided the conviction to re-invest in the business in April 2014. Total revenues grew from NOK 2,306 million in 2006 to NOK 6,452 million in 2013, a compound annual growth rate of 16%; EBITDA increased from NOK 305 million in 2006 to NOK 1,325 million in 2013, a compound annual growth rate of 23%. Over the same period, operating margins improved from 13% to 21%; employment, product innovation and R&D investment all more than doubled.

Re-investment in Visma

In April 2014, following a decision by majority-owner KKR to sell part of its original 2010 stake in Visma, HgCapital decided to sell the remaining stake held by its HgCapital 5 fund generating a total return on all capital invested between 2006 and 2014 of 5.1x original cost and a gross IRR of 33%. HgCapital and its clients will be investing c. £405 million in the business for a 31% stake via its HgCapital 7 fund and co-investment participation as a co-lead investor alongside KKR and Cinven. This transaction valued the business at a total enterprise value of NOK 21 billion (£2.1 billion).

The re-investment in Visma reinforces our conviction in the continuing strength of the business; backing a management team we know well with a strong track record of creating value for investors.