UK-headquartered buyout group HgCapital has sealed the sixth exit from its HgCapital 5 Fund following the sale of SHL to trade buyer The Corporate Executive Board Company.
The $660 million sale price means HgCapital has booked a 3.1x multiple to original cost, with the investment delivering a gross internal rate of return of 26 percent, it said in a statement.
The exit also comes as a boon for HgCapital Trust, the firm's listed investment fund counterpart which co-invests in its deals. The trust will book cash proceeds of about £27.1 million ($42.3 million; €33.7 million) following the sale, an uplift of £5.4 million over the carrying value of the investment. It will lead to an increase in net asset value per share of about 17.2p, the trust said in a statement.
HgCapital had earlier announced the forthcoming retirement of its head, Ian Armitage. Armitage will step down as chairman in November after 24 years at the firm. After 10 years at 3i Group, he joined the private equity division of Mercury Asset Management in 1988, which became HgCapital in 2000 when it spun-out. He was chief executive for 17 years, before becoming chairman in 2007 and handing over responsiblity for the day-to-day running of the business to current chief executive Nic Humphries.
Humphries and his team bought SHL in late 2006 in a public-to-private deal. It was the first deal concluded by the firm's then-fledgling business services sector team, and valued the company at about £100 million.
SHL services include employee testing
The exit is HgCapital's sixth from Fund 5, which has to date delivered a multiple of 2.7x and IRR of 30 percent on realised investments. It has returned more than 120 percent of invested capital to investors since its launch, and still has seven companies remaining in its portfolio, the firm said.
Since 2008, the firm has exited 12 investments, returning about £1.1 billion to investors.
Under HgCapital's ownership, SHL grew revenues by more than 80 percent, and earnings before interest, tax, depreciation and amortisation by more than 200 percent.
This was achieved both organically and via acquisitions, the firm said. It also strengthened the company's management team, restructured it to centralise certain functions which included a newly-created global shared service centre, invested in new technology and improved sales capabilities, among other measures.
HgCapital also oversaw SHL's merger with US-based Previsor, an employment business owned by Veronis Suhler Stevenson.
Lisa Stone, a partner in HgCapital’s portfolio management team, said in a statement: “SHL is a very high quality business, recognised in its industry as the clear global leader. The management team has done a tremendous job in growing and developing the business and I am delighted that SHL is finding a new home with CEB where it has a strong strategic fit.”
Morgan Stanley, Weil,Gotshal & Manges, and Deloitte advised HgCapital on the deal.