HgCapital delivers 3.3x on second Mercury exit

The £380m TMT fund will have returned nearly 40 percent of invested cost.

HgCapital has generated a 3.3x investment multiple on its second exit from Mercury 1, the firm said on Wednesday.

The firm sold Danish cloud solutions provider Zitcom Group to Belgian hosting specialist Intelligent for an undisclosed sum, having acquired the company in December 2015.

The exit delivered a circa 145 percent gross internal rate of return (IRR) after being in the portfolio for just 18 months. The £380 million ($485.5m; €431.2m) Mercury fund has now achieved overall realised returns of around 2.8x cost and a 70 percent gross IRR since making its first investment in 2012.

“HgCapital has been a fantastic partner for Zitcom Group and has helped us mature – both as a business and as individuals,” Stefan Rosenlund, CEO of Zitcom Group, said in the statement.

Zitcom acquired and integrated four companies during HgCapital’s ownership, doubling its customer base and revenue, as well as almost tripling group profits.

The group currently serves over 100,000 business and private customers in Denmark, operating under brand names such as Zitcom, Wannafind and ScanNet.

This latest exit follows HgCapital’s sale of Relay Software for 2.1x cost and a 39 percent gross IRR in August 2016.

The deal will mean the Mercury fund – which specialises in lower mid-market technology, media and telecommunications – has now returned nearly 40 percent of invested cost.

HgCapital was advised by Harris Williams, Linklaters and Accura.

Earlier this year, the firm held final closes on its £2.5 billion HgCapital 8 flagship and £575m Mercury 2 vehicle. It manages more than £8 billion for institutional and private investors from its bases in London and Munich.