HgCapital, the UK and Germany-based private equity firm, has backed management at UK-based financial software developer Rolfe & Nolan in one of the year’s first public to private transactions.
The recommended offer is being led by Maia Holdings, a company set up by HgCapital and management, in a deal worth 100 pence per share and valuing the Rolfe & Nolan at £15m. The offer equates to a premium of 74 per cent over the closing price of 57.5 pence on 20 November 2002, the day prior to confirmation of an approach to the Rolfe & Nolan board.
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.
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. In the year ended 28 February 2002, Rolfe & Nolan reported pre-tax profits of £1.8m and had net assets of £5.2m. In the six months ended 31 August 2002, Rolfe & Nolan made a profit before tax of £77,000, and as at 31 August 2002, had net assets of £5.6m.
HgCapital will control 78 per cent of the company with management taking the remainder. Maia Holdings is being financed out of £235,000 of equity to be provided by the management team, £1.4m of equity and £15.6m of debt.
The public to private market is tipped is a key market for private equity firms in 2003, particularly given the continuing decline in the public markets. Already this year, Alchemy Partners has backed the E375m privatisation of Riverdeep, the Ireland-based education software business.