Inflexion’s Sergio Ferrarini on merging the cash management sector

Inflexion has entered into an agreement to acquire a majority stake in Nomentia, a European treasury and cash management software provider.

Inflexion Private Equity Partners believes the Nordic and DACH regions offer consolidation opportunities for Nomentia, a treasury and cash management software provider, Inflexion partner and head of technology Sergio Ferrarini told PE Hub Europe. The fragmentation of the sector in Europe, particularly in the mid-market, will help drive that strategy.

Headquartered in Helsinki, Nomentia processes over €1.2 trillion of payments through its bank connections annually. The company’s services include payments, bank connectivity, cash visibility, forecasting, trade finance and risk management. Inflexion agreed to acquire a majority stake in Nomentia from PSG Equity and Verdane, via its Inflexion Buyout Fund VI, in early March.

“Nomentia is one of the few platforms of scale in Europe,” said Ferrarini. “We’re backing it to become the market leader in its core markets, particularly in the Nordics, DACH and the Benelux.”

London-based Inflexion has been busy in the Nordics. The investment in Nomentia marks its fourth in the region, following its investment in EcoOnline in January. “We’re seeing more opportunities there because it’s probably one of the most active markets for us in tech,” Ferrarini explained. “We are also particularly interested in businesses that have become local champions and are now looking to expand internationally. That’s where we can come in and help drive that expansion.”

Consolidation will drive a lot of that growth in Nomentia’s case. “The market is still fragmented, particularly in Europe,” said Ferrarini. “There still are several small national players, which creates an opportunity for market consolidation. This is particularly true in the mid-market segment, which we believe today is still underserved.”

Growth in the DACH region, particularly Germany, is another priority for Inflexion, and the region already represents a quarter of Nomentia’s revenue today. “The company has an established track record in the region already; they have invested significantly to combine the best of breed modules that they have either developed or acquired into one single TMS solution,” said Ferrarini. “We’re seeing really good traction with German customers.”

Inorganic growth is a big part of Inflexion’s strategy – the firm has supported over 430 acquisitions for its portfolio across 27 countries. In Nomentia’s case, Inflexion is looking for complementary software capabilities that can accelerate the company’s product road map, according to Ferrarini.

Correct characteristics

Cash and treasury management is a “highly attractive” market for Inflexion, as it is seeing double-digit growth. This is accelerated by companies increasingly adopting services in the segment, typically alongside their enterprise resource planning (ERP), according to Ferrarini: “It’s mission-critical software for companies, which creates high stickiness that we obviously like.”

Nomentia met all characteristics Inflexion typically looks for in a software business: a leader in its home market but growing internationally, and a great management team. “Ultimately, it has best-in-class financial metrics for a software business,” Ferrarini explained.

Within its technology practice, Inflexion generally focuses on B2B software and data businesses. “The office of the CFO is a theme we are currently prioritising,” said Ferrarini. “Nomentia plays into that space.”

Consolidation is a trend Ferrarini expects to continue over the next five to 10 years for the cash and treasure management market. “That will lead to building bigger platforms that will become the winners in the segment, and we think Nomentia will play a key role in that.”