London-listed 3i Group has agreed to sell Civica to OMERS Private Equity (OPE) for £390 million ($354 million, €605 million), generating a 2.1x return, according to a statement.
3i originally invested £109 million in Civica in 2008. Civica is a provider of specialist software systems, cloud-based IT services and technical outsourcing, mainly to public sector organisations.
Under 3i’s ownership, Civica has grown organically by continuing its software sales and by further rolling out cloud-based IT services. In addition, 3i supported Civica’s product expansion and assisted the company in entering new markets by completing 10 add-on acquisitions in the UK, Australia and New Zealand. Staff levels rose from 1,350 to 2,000 during 3i’s ownership period.
It is unclear what the debt-equity split was, but it is understood that OMERS PE, the private equity arm of the Ontario Municipal Employees Retirement System, used a working capital facility by GE Capital, according to a source familiar with the matter. When the deal is closed, a full finance package will be put in place, the source said.
OMERS PE’s investment in Civica is the fourth direct investment from its European private equity team, which was set up in 2009. Last June, the group acquired Lifeways, a specialist service provider for disabled people.
In 2012, OMERS’ private equity portfolio generated a 19.2 percent return, which was driven primarily by its direct private equity investments. “Our returns in 2012 from direct investing are a lot higher than our returns from fund investing,” chief executive officer of OMERS Private Equity Paul Renaud told Private Equity International in a prior interview.
For 3i, the sale of Civica marks the sixth realisation of this year. In March, it sold its 22.8 percent stake in insurance intermediary group Hyperion to General Atlantic, netting a 2.1x return. A few weeks earlier, it also sold UK restaurant chain Giraffe to Tesco for £48.6 million. In February it generated a 2.6x return on the CAD$975 million (€751 million, $960 million) sale of Canadian manufacturer Mold-Masters and it sold Enterprise, a UK provider of infrastructure related services, to Spanish infrastructure group Ferrovial for £385 million. In January, the firm reportedly netted a 5.5x return on the realisation of German engineering business Norma Group.