HgCapital has started harvesting investments from the Mercury Fund, its £380 million (€445 million; $493 million) 2011-vintage TMT sector-focused fund.
The firm has sold Relay Software, a Dublin-based provider of software to the insurance industry, to Applied Systems, a privately owned software business based in Illinois that also serves the insurance market.
The deal is understood to have generated a gross IRR of circa 40 percent and returned a multiple of 2.2 times investors’ capital.
HgCapital Trust PLC, a listed entity that invests only in HgCapital’s funds, said that the sale price of Relay represented an uplift of “73 percent over the carrying value of the business” as of its December 2015 valuation. The exit will return £4 million in proceeds to the listed trust.
The Mercury Fund was launched to allow HgCapital to invest in smaller companies in the technology, media and telecoms space. Investors in the fund include Pantheon, Partners Group, Aberdeen Asset Management and Scottish Widows Investment Partners.
The Mercury Fund is now around 65 percent invested. A spokesperson for the fund declined to comment on whether it had yet returned to market to raise a new iteration of the fund.
HgCapital as a whole invests in multiple sectors – including TMT – from its buyout fund series. The latest of these, HgCapital 8, is currently in market with a target size of £2 billion. HgCapital also invests in renewable energy through a separate fund line.