Hg eyes business automation tech as inflation-proof play; Copper Street exits Satispay as Addition takes stake

Good morning Eurohubsters, Craig McGlashan here with the first Dealflow of the week.

I hope you had a good weekend. Much of mine was spent watching the UK government stand firm on its plan to use extra borrowing to fund the abolition of the top rate of income tax, before it U-turned on the policy this morning. The policy was unpopular – to say the least – with financial markets, so perhaps this latest move will create a little stability and a more palatable investment environment.

Inflation proof. One major criticism of the policy was that it would fuel inflation when prices were already rising at their fastest pace in decades. Regardless, high inflation is not going away in the short term, so many dealmakers will be looking to sectors that offer some protection.

One of these could be a sub-sector of technology, David Toms, head of research at Hg, told me this morning.

“Software that automates business processes continues to be a key focus for us, due to its high degree of inflation protection,” he said. “Many of our companies provide software that frees up human labour for higher value-add (and more interesting and stimulating) activities – in an environment of rising labour costs and falling labour availability, anything that helps drive labour productivity is well-positioned for continued strong performance.

“Consumer-focused tech is clearly facing a more challenging time, as are companies with low or negative margins, where input cost inflation has a much greater impact on earnings.”

You can read the whole interview with Toms, where we also cover valuations, exit strategies and other topics, here.

Paying out. Copper Street Capital announced that it has divested its minority stake in Italian mobile payments company Satispay. Addition has bought out Copper Street’s stake as part of a new round of funding for the company, taking its valuation to over €1 billion.

Satispay launched in 2015 and was backed by Copper Street in 2018. The company, headquartered in Milan, aims to simplify everyday payments for consumers and cut transaction fees for retailers, with a view to helping them transition to mobile payments.

Since Copper Street’s backing the company has achieved a consumer growth increase of 800%. The company was valued at approximately €100 million at the time of Copper Street’s investment.

Copper Street was established in 2015 and is based in London.

Addition is a New York-based venture and private equity firm that invests in early and growth stage technology companies.

Health tech. Levine Leichtman Capital Partners portfolio company Prime Global acquired Newnham, England-based Earthware, a digital and technology specialist agency that creates digital and technological products for healthcare practitioners and patients.

Knutsford, England-headquartered Prime Global provides pharmaceutical, biotech and healthcare businesses with full-service professional communications services and has been a portfolio company of LLCP since April 2021.

LLCP was founded in Los Angeles in 1984 and is a middle-market private equity firm.

London calling (again). We’ve seen a lot of private equity firms – such as Thoma Bravo – or companies that work with the industry – like executive search company Raines International – open London offices as companies look to expand in Europe.

This morning, there was a little more of that as law firm McDermott Will & Emery hired Garrett Hayes as transactions partner, based in London. He will work on M&A and private equity, as well as corporate advisory.

“Garret’s appointment is a great addition to the team and is in line with our strategy to grow our corporate and private equity offering in London and Europe,” said Harris Siskind, global head of McDermott’s transactions practice, in a statement. “His telecom and infrastructure M&A practice will also provide notable synergies with our teams in Germany and the US.”

The PE Hub Europe team was at McDermott’s HPE Europe 2022 conference in London last Thursday. You can check out my colleague Nina Lindholm’s write-up of the healthcare focused private equity event here.

That’s it from me – I’ll be back with you on Tuesday.

Cheers,

Craig