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Vinasaty – the Money-go-Round – do the math

All aboard the IRIS investment roundabout or how to make a £110 million return on an £146.5 million investment. Or is that a £36.5m loss?

OK, we admit we don’t understand the private equity side of corporate finance, to us it’s just a funny-money world where investors pass the corporate parcel in the hope it is not in their hands when the music stops playing however here are some figures…

• In March 2007 the Computer Software Group (or CSG which by then had acquired the legal software suppliers AIM, Laserform and Videss) delisted from the AIM market in an MBO and refinancing package worth over just over £122 million. HgCapital invested £120m in the deal and the MBO team included Vin Murria, Michael Jackson (no, not dead popstar) and Barbara Firth.

• In June 2007, after acquiring another legal software supplier Mountain, CSG was the subject of a merger and recapitalisation deal worth £500 million and became part of the IRIS Software Group, Hellman & Friedman acquired both businesses from HgCapital which remained a significant shareholder.

• In March 2011, the IRIS Group was split into two divisions – IRIS Accountancy Solutions and IRIS Software Group (which included the IRIS Legal division)

• In December 2011 HgCapital invested £26.5 million in IRIS to reacquire a majority shareholding.

• In March 2013 (today) HgCapital sold Computer Software Holdings (which includes the IRIS Software Group and IRIS Legal) for £110 million to AIM-listed Advanced Computer Software Group team including Vin Murria, Michael Jackson (no, not the now deceased dead popstar) and Barbara Firth. This transaction has been financed through Advanced’s existing cash resources, by a recent share placing that raised £44m (gross), by new bank debt and a new £105m bank facility. The acquisition statement adds that it expects to see £1.4m of early cost savings plus a further £1.0m of cost synergies targeted within 18 months. There is a net debt of £65m at date of acquisition.

COMMENT: Dear HgCapital, please feel free to invest in Legal Technology Insider Limited although we cannot guarantee being able to (apparently) reduce the value of your investment by £36.5 million in six years.

5 replies on “Vinasaty – the Money-go-Round – do the math”

Mmmmmmm

“Hellman & Friedman acquired both businesses from HgCapital which remained a significant shareholder.” not sure it was that significant.

They bought it back for a pittance compared to what H&F paid them.

Don’t go weeping for the HG boys.

They are wealthy in a way that magic circle senior partners can only dream of.

So let’s just do the sums here on the figures disclosed above:

£120m in by Hg for CSG March 2007
£500m when Hg flog it to H&F in June 2007

So a blinding £380m up in 3 months (ok so there would be an initial investment in the original IRIS)

Hg buy it back for what appears to be c£27m in December 2011.

Hg split it up so they can have a ‘packaged sale’ in 2013

Flog part of the £27m investment from 2011 to CSH for £110m in March 2013.

So broadly by going full circle from CSG to CSH (how ironically close in name) they make £380m less £27m plus £110m – I’m no Corporate Finance guru but that looks a rather good deal for Hg on the figures just shown.

So rather than them using the Hg name how about Au (seems a bit more apt)

Damn, I’m in the wrong business – thank you for that. I shall now ask HSBC if I can have a £100m bank facility

But what about the customers who’ve had 6 years of upheaval, non stop change and poor development and service?

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