TMT Sector insights Our While the overarching trends affecting the Our TMT portfolio in 2014 investments TMT sector are global, the market itself can be surprisingly regional. An understanding TMT of both the broader industry picture and local expertise is an absolute requirement HEG current for success. Our TMT team has seven investment professionals across Europe, and a track record of successful investment Northgate Public over more than 20 years and commitments of €3.7 billion to 16 TMT companies. Services new in 2014 Numericable Group partially realised Ufinet new in 2014 Visma new in 2014
Partners Portfolio companies in 2014 2 5
98 Cinven Annual Review 2014 Cinven Annual Review 2014 99 Our 1 2 investments “ 2014 was a busy year TMT for our TMT team, with Sector three new investments insights continued and the realisation of European cable champion Numericable Group.” David Barker Cinven Partner TMT sector Partners Generating In June 2014, our exceptional value investment in Spanish fibre 1 David Barker Partner In 2014 we made three new operator Ufinet was widely Challenges and Our long experience of 2 Nicolas Paulmier TMT investments from the characterised as signalling opportunities investing in the sector helps Partner fifth Cinven fund, and further a re-opening of investor The main challenges in TMT us to identify ways of creating realisations of our landmark interest in the Spanish market. are well-rehearsed – cheap value in new opportunities. investment in French cable In reality our interest in the access to high bandwidth in The Spanish fibre business, operator Numericable region had never diminished telecoms, the migration of IT Ufinet, is a good example of Group. This highly successful and the investment was the infrastructure and enterprise this, in which the investment investment generated a capital result of our regional presence, software to ‘the cloud’, and case was informed by our gain of c. €1.7 billion and contacts and knowledge the digitisation of the media. experience with Completel was the result of an almost of the business model. However, these can also in France. decade-long consolidation present significant investment of the market, creating a true At end December 2014 we opportunities. Finding precisely industry champion, now listed completed an investment in the right companies in which on the NYSE Euronext Paris Northgate Public Services, to invest requires both local stock exchange. building on our experience knowledge, contacts and an of software this time intimate understanding of such Our investment in Visma in servicing the public sector. business models, something August 2014, the leading that we are continually building Nordic business software and In addition to the new on through our dedicated services company, presents investments, HEG (formerly sector focus. another interesting regional Host Europe Group) signed buy and build opportunity. its third significant acquisition in what is a steadily developing buy and build opportunity.
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Overview Cloud Hosting; thus HEG now HEG provides hosting and offers the full hosting product domain services to SMEs. assortment. intergenia also About half the company’s provides access to attractive revenues are from Germany, regions such as BRICs, Asia Chairman Acquired Sales approximately a third from the Pacific and the US and allows Lord John Birt UK and the remainder from HEG to realise revenue and CEO August £152m various countries in Europe, cost synergies in areas such Patrick Pulvermüller 12 months ending December 2014 the Americas and Asia Pacific. as data centres, server capex 2013 (pro forma) and energy costs. Employees Investment thesis HQ Cinven’s TMT team identified In tandem with the acquisition, 800 HEG as well positioned – the combined group was UK (approximate) given its leadership position in refinanced, enabling intergenia www.heg.com (European operations) Europe’s two largest markets to be acquired without – to capitalise on the structural additional equity. Cinven representatives growth trends of increasing David Barker cloud computing and web Cinven’s Portfolio team Thomas Railhac presence among SMEs, continues to be actively Florian Luther within a fragmented market. involved with the implementation of a number Progress in 2014 of initiatives, including the HEG continued its strong integration of add-on growth trajectory in 2014, acquisitions, new product with revenues and EBITDA development and sales force increasing by 5.8% and and marketing effectiveness. 11.6% respectively. In Cinven and management December, HEG continued continue to evaluate its sector consolidation with further add-on investment the €210 million acquisition opportunities. of German-based intergenia, broadening HEG’s product offering into lower priced products in Managed and
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Overview It is also well placed to benefit Northgate Public Services from the digitisation of public (NPS) provides software, sector information, the need outsourcing and IT services to for government bodies to local government and public improve productivity and CEO Acquired Sales sector organisations. Founded their desire to interact more David Meaden in 1969, the company employs effectively and directly with December £181m more than 1,700 people in citizens. Cinven representatives 12 months ending April 2014 the UK across 10 offices David Barker 2014 (actual) and more than 650 people Progress in 2014 Chris Good HQ Employees internationally including those Following our acquisition of in its software development the business in December, UK 2,400 centre in Mumbai. we intend to build on its strong (global operations) (approximate) track record of growth. The www.northgate-ispublicservices.com Investment thesis company’s order book in its Cinven’s TMT team identified core products has increased NPS as an attractive by 13% compared to the investment given its strong prior year, providing strong position in a variety of niche momentum for the year ahead. software applications across the UK public sector, the critical nature of its offering and growth potential into related areas. Given NPS’ investment in flexible on- demand software capabilities, the company has the potential to develop its position in attractive niches such as healthcare screening and the police and to expand internationally in markets including Canada, the US and Australia, where NPS already operates.
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Overview Progress in 2014 Numericable Group is a Following the successful French cable operator, execution of Cinven’s providing triple play services consolidation strategy, which in of HD television, video on turn enabled the cross-selling Chairman (Altice) Acquired Sales demand and broadband of broadband and telephony Patrick Drahi March 2005/ internet and telephony to products, the Numericable CEO (Altice) €13,464m nearly 10 million households. Group listed on the NYSE Dexten Goei November 2005/ 12 months ending December 2014 Following our acquisition Euronext Paris stock Sept 2007 (actual) of the telecom assets of exchange in November 2013. Cinven representatives Employees France Télécom, Canal+ and Nicolas Paulmier HQ TDF to create Numericable Following this highly Thomas Railhac 9,360 Group, the business began a successful IPO, Cinven Luxembourg (approximate) market consolidation strategy, has crystallised significant www.altice.net including the acquisition of value from the fund’s Altice One in November 2005, remaining holding throughout Noos-UPC in July 2006 and 2014. Through a series of Completel in 2008. divestments (one of which exchanged all of the fund’s Investment thesis remaining Numericable shares Our TMT team believed the for Altice shares), the fund’s French cable market was realised proceeds in the overly fragmented and there investment reached was an opportunity for a well- €1.7 billion at December, run consolidator to harness or 3.5x cost, with remaining synergies while investing in its value of €506 million at the network to drive growth and reporting date, equating to a increase the penetration of total value of 4.5x cost, and triple play purchases. an IRR of 159%. In addition, in November 2014 Numericable Group signed the €17 billion acquisition of SFR.
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Overview Progress in 2014 Ufinet provides fibre Ufinet performed well in infrastructure and services 2014, with revenue growth to telecom operators in Spain driven by strong performance and several Latin American in Latin America and CEO Acquired Sales countries. Ufinet leases its underpinned by resilient Iñigo García unique optical fibre network trading in Spain. Cinven has del Cerro Prieto June 2014 €130m in the main metropolitan areas significantly strengthened 12 months ending December 2014 of Spain and Latin American the management team since Cinven representatives HQ (actual) countries, as well as providing acquisition, appointing José Jorge Quemada Employees transmission services and Antonio Tazón, former CEO Thomas Railhac Spain satellite network capacity. of former Cinven investment 170 Cinven acquired the business Amadeus, as Chairman; a (approximate) from Spanish utility company new CFO; and a new Head www.ufinet.com Gas Natural Fenosa. of Corporate Development. Ufinet continues to cultivate Investment thesis a strong pipeline of potential Our experience of investing acquisitions. in ‘telecom neutral’ cable and fibre operators (such as the In the first few months of Numericable Group and Ziggo, ownership, Ufinet made in France and the Netherlands good progress, including respectively) enabled our the development of ‘lit fibre’ TMT team to identify Ufinet’s services in metropolitan potential, in particular given the areas in Spain for wholesale structural growth in data traffic Ethernet connectivity. The and fibre networks. Backed company has expanded by strong and stable cash its network deployment, generation from the leasing of increasing the number of its Spanish networks, Ufinet buildings, data centres and is well positioned to further mobile towers connected penetrate Latin American to Ufinet’s network. It has markets, as well as to explore also undertaken a review of consolidation opportunities. the business’s commercial effectiveness, including sales force, pricing and reporting. 108 Cinven Annual Review 2014 Cinven Annual Review 2014 109 Our investments
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Overview it acquired Info Consensus, Visma provides accounting, a software provider to tax and payroll software Norwegian municipalities; and and services and online FMS Group, the company’s cloud based applications first Latvian acquisition, CEO Acquired Sales to companies in the Nordic expanding its presence in Øystein Moan region. It has more than the Baltics. Visma increased August €840m 340,000 SME customers, its market share of the Cinven representatives 12 months ending December 2014 and also services large Norwegian debt collection David Barker 2014 (actual) businesses and the public market with the acquisition Chris Good Employees sector. Established in 1996, of Creno AS in November HQ Visma operates across followed by two Norwegian 6,100 12 European countries and payroll systems business add- Norway (approximate) generated NOK7.1 billion of ons, Finale Systemer AS and www.visma.com revenues in 2014. Cinven co- Mokastet AS, as it continues invested in Visma on an equal to build out its offerings and basis with HgCapital and KKR. its geographical reach.
Investment thesis Cloud services continue to be Visma has a track record of the strongest driver of growth consistent growth, driven by and Visma is steadily launching innovation and overseen by new SaaS (Software-as-a a strong management team. Service) products including Cinven intends to support accounting, procurement, the business through its payroll, debt collection and next stage of organic and software consultancy. acquisitive growth. For the year ended 31 Progress in 2014 December 2014, revenues During our first six months of and EBITDA grew by 10.3% ownership, organic revenue and 11.4%, respectively. performance was strong, and Visma continued its roll-up of the sector, with five new bolt-on acquisitions: in July
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