Birch Hill inks C$412m take-private

The Canadian mid-market firm will acquire listed IT company Softchoice, Birch Hill’s first investment of 2013.

Toronto-based Birch Hill Equity Partners will take IT services business Softchoice Corporation private in a transaction valued at C$412 million (€308 million; $402 million).

Softchoice provides technology services to thousands of corporate and public organisations in the US and Canada, according to a statement. Birch Hill will acquire all of the Toronto-listed company’s outstanding shares for C$20 per share in cash, which represents a 24 percent premium to Softchoice’s 22 April share price. The transaction, which is expected to close in June, marks Birch Hill’s first investment of 2013. 

“It’s hard to gauge from our own deal flow, but I would say there’s not a lot of low hanging fruit,” partner at Birch Hill Stephen Dent told Private Equity International. “There’s not a lot of topline growth in the market, so we’ve been looking for opportunities where you can roll up your sleeves and work on the productivity of the company.”

Birch Hill is investing its fourth buyout fund, which closed on C$1 billion in February 2011. Prior to the Softchoice agreement, the firm had deployed roughly half of the fund in six investments.

Birch Hill had an active year on the realisation front in 2012, exiting three companies. The firm has distributed about C$1.5 billion back to limited partners during the last 18 months, a period of slow economy growth in Canada, according to Dent.

“It’s hard to find sectors where there’s a lot of topline growth opportunities in an economy that’s growing 1 percent a year,” he said.

Birch Hill focuses on small and medium-sized Canadian companies and has C$2 billion in capital under management. The firm’s entire portfolio represents more than $4.7 billion in total revenue.