Battery to back R&N counter-bid

US venture capital firm Battery Ventures is preparing a bid for UK-listed financial software business Rolfe & Nolan, eclipsing HgCapital’s 100 pence offer.

A team of US investors is preparing a rival offer for UK-listed financial software developer Rolfe & Nolan, three weeks after European private equity house HgCapital made a recommended 100 pence per share for the business.

US venture capital firm Battery Ventures has joined forces with Navora Capital, a privately held investment firm which buys and manages European technology businesses with a value of between $3m and $300m, in a bid for the business. The two firms confirmed their interest in the business in a stock market announcement this morning.

Navora Capital was set up by Doug Bergeron, a former senior executive at SunGard Data Systems, which made an unsuccessful offer for Rolfe & Nolan in February 1998.

HgCapital’s 100 pence per share offer was made at a 74 per cent premium to the closing Rolfe & Nolan price of 57.5 pence on 20 November 2002, the day prior to confirmation of an approach to the Rolfe & Nolan board. Following HgCapital’s offer, US transaction-processing business onExchange, which made an 85 pence offer for the business in July 2002, indicated that it was preparing an improved bid for the business.

Rolfe & Nolan is a specialist software provider for the listed derivatives industry. The company’s products are used by over 250 clients throughout America, Europe and the Asia-Pacific region and include major banks, brokers, fund managers and energy companies.  The company was listed on the London Stock Exchange in 1991. In the year ended 28 February 2002, Rolfe & Nolan reported pre-tax profits of £1.8m and had net assets of £5.2m.

The sale comes about as companies selling software to the financial services market encounter ongoing trading difficulties. Role & Nolan recently began a redundancy programme to save £1.3m per annum as part of ongoing efforts to reduce its cost base. News of the rival bid pushed shares in Rolfe & Nolan to 105 pence, five per cent above HgCapital’s offer.

Rolfe & Nolan has agreed to pay Maia Holdings, HgCapital’s acquisition vehicle, a fee of around £150,000 if the directors withdraw their recommendation of the offer whether in order to recommend a higher competing offer. News of the level of acceptances of the HgCapital offer is expected on Thursday.

Both Navora Capital and Battery Ventures were unavailable for comment. HgCapital declined to comment.