Investcorp picks up HR software biz Veda

General Atlantic talks 2024 dealmaking; PAI to part with ELITech.

HR software continues to be an important segment as businesses aim to digitise more and more of their operations. Investcorp is the latest firm to target the sector, as the firm has agreed to snap up a majority stake in Veda, a German HR software provider.

We then continue our outlook Q&A series. This time we hear from Gabriel Caillaux, General Atlantic’s co-president, global head of climate and head of EMEA, who predicts private equity’s focus will shift towards value proposition to consumers, profitable growth and real unit economics in 2024.

We’ll close with an exit – something many PE firms want to see more of in the new year – with PAI Partners planning sell an in-vitro diagnostics developer and manufacturer to Bruker Corporation. We’ve got the potential return figure for you on that.

Digital HR

Let’s kick off the new year with a software deal. Investcorp, via its global technology arm Investcorp Technology Partners, has agreed to acquire a majority stake in Veda, an HR software and payroll-as-a-service provider.

Veda’s revenues in 2023 were around €20 million and the company’s roughly 1,200 customers include airline Lufthansa and “many mid-market enterprises”, according to a statement.

The company focuses on the DACH region, where the HR and payroll software market for SMEs is around €3 billion, the statement said. It is headquartered in Alsdorf, Germany and its CEO Ralf Graessler will remain invested.

Investcorp is Veda’s first institutional investor. It plans to grow Veda’s go-to-market strategy and its products and services, focusing on the company’s “fast-growing” cloud operations. Add-on acquisitions will focus on companies with complementary products and services in what the statement described as a “large and fragmented” DACH market.

Other recent deals in the HR software segment include Main Capital-backed BCS HR Software’s acquisition of Epowerhr and Keensight Capital’s investment in Aconso.

Back to basics

Next up we have the latest instalment in our outlook Q&A series. This time we caught up with Gabriel Caillaux, General Atlantic’s co-president, global head of climate and head of EMEA. Here’s a snippet from the story:

How do you expect the first six months of PE dealmaking in 2024 to compare with the last six months of dealmaking in 2023?

We are anticipating a healthy shift to dealmaking going back to the basics, focusing on the value proposition to consumers, profitable growth, real unit economics and fully funded business plans. One of the silver linings of the market correction is that the days of companies selling products at negative gross margins are gone.

Moving forward, companies that are executing based on fundamentals are poised to gain market share and will be able to continue to raise capital from private markets and, eventually, public markets. We have also seen many overly aggressive and economically irrational investors leave the market, creating an opportunity for General Atlantic and other firms experienced in company-building to partner with these growing companies to help scale and add value for their next chapter of growth.

What will be the most important trends affecting your dealmaking in 2024?

Through a tighter fundraising environment, we have observed a significant shift among LPs, with investors increasingly seeking deeper, more strategic relationships with GPs who provide the breadth and depth of access to a full suite of asset classes and strategies. As we seek to create value for our capital partners, we have expanded our investment programme to meet their evolving needs.

We are continuing to expand our investment capabilities in climate and credit, where we believe we have a competitive advantage that leverages our core strengths. In addition to these developments, we are also focused on harnessing the growing prospects in the digital and AI world, emerging markets and health and wellness space.

Check out the full interview for more on Caillaux’s 2024 outlook.

Diagnostics

Let’s close with a deal that came in over the break. PAI Partners will hit a 3.7x gross multiple on its investment in in-vitro diagnostic company ELITech Group if a potential sale to Bruker Corporation goes ahead.

Life science research and diagnostics company Bruker has signed an agreement with the private equity firm that includes a put option to buy Paris-headquartered ELITech.

ELITech develops and makes in-vitro diagnostics (IVD) instruments and reagents and is particularly strong in molecular diagnostics and microbiology, according to a statement. Hospitals and laboratories in more than 100 countries use the company’s products and it has seven development and manufacturing sites in Europe and the US.

PAI invested in the company in 2017, since when ELITech has invested in R&D, created new molecular diagnostics systems and entered new product development partnerships.

“ELITech is an agile, research-driven company and this sale to a leading strategic player is a testament to the quality of the business,” said Stefano Drago, a partner at PAI, in a statement.

ELITech’s employee works councils will now be consulted on the deal, which is also subject to regulatory and customary closing conditions.