Thoma Bravo to acquire Hypergene; Verdane hits gym with Urban Sports Club

Schroders Capital on 2024.

Opening the day is Thoma Bravo’s European team inking another deal, agreeing to acquire Swedish software-as-a-service company Hypergene, which serves the planning and performance management industry. We dig into the revenue figures on that one.

Next up is yet-another sports-related deal, as Verdane leads an investment into Urban Sports Club, a sports and wellness company.

We then switch to the outlook for next year, as Irien Joseph hears from Schroders Capital’s Paul Lamacraft about how sustainability and impact strategies will be in vogue in 2024.

Rounding things out, Searchlight Capital Partners has won court signoff for its take-private of Gresham House, a deal we’d earlier spoken about with Searchlight’s Oliver Haarmann.

Planning 

Thoma Bravo’s decision to open a London office looks to be paying dividends, after the firm announced the third investment by its nascent European team.

The tech private equity giant is acquiring a majority stake in Hypergene, a software-as-a-service company for planning and performance management, from Monterro and other minority shareholders.

Malmö-based Hypergene develops software for the C-Suite and office of finance for strategic planning, budgeting and forecasting and project and portfolio management.

Thoma Bravo was likely drawn to Hypergene’s attractive growth, with the company increasing its annual recurring revenue by over 8x since Monterro bought into it in 2016. Part of that has been through acquisition, including buying German SaaS company Proventis last year, whose annual turnover was €3.4 million. Hypergene’s own 2022 turnover forecast at the time was SKr240 million ($23 million; €21 million) with an EBITDA result of 10 percent.

“Hypergene delivers state of the art analysis and operational capability at a time where flexible planning is more important than ever,” said David Tse, a VP at Thoma Bravo.

Hypergene is Thoma Bravo’s third investment by its Europe-based team, following its investments in Logex in March and EQS in NovemberThe firm opened its London office in 2022, which is led by Irina Hemmers. Hypergene is also Thoma Bravo’s second investment in the Nordics following the acquisition of Mercell in 2022.

Sport in the city 

Verdane has led a €95 million investment into Urban Sports Club, a sports and wellness company. Other investors included HV Capital and ProSiebenSat1.

Berlin-based Urban Sports Club will use the cash to grow its B2B business in its seven markets: Germany, the Netherlands, France, Belgium, Spain, Portugal and the new addition of Austria.

Like with Hypergene, Urban Sports Club’s revenue is growing fast. Its net revenue grew by 100 percent from 2021 to 2022 and “continues to grow strongly in 2023”, according to a release. Its corporate client customer base has grown by 2.5 times since 2022, reaching over 7,000 companies.

The sports sector has been booming of late, including in growth equity. The Raine Group’s Jason Schretter spoke to PE Hub Europe last week about how its investment in sportswear and digital retailing platform Castore will help it reach the biggest sports teams in the world, for instance.

Sustainability

We’ve had a bit of a green theme on the Dealflow this week, which has been pretty apt timing given the big announcement from the COP28 climate change summit (see yesterday’s Dealflow for more).

There should be even more of a focus on sustainability and impact (S&I) from private equity firms going into 2024, according to Paul Lamacraft, senior private equity investment director at Schroders Capital, who spoke to PE Hub Europe’s Irien Joseph in the latest article in our outlook Q&A series.

Here’s a snippet:

What do you expect to see in 2024?

Fundraising has reduced significantly in 2023 as LPs adjust to a changing macro environment and the denominator effect. I expect this to rebalance in 2024 as investors become more accustomed to a higher interest rate environment and still see attractive returns being generated across private markets and the denominator effect reduces.

I also expect to see an increased focus on S&I strategies as societal and climate challenges continue to mount globally. Next year we will likely see more evidence to support our view that positive impact can be achieved at the same time as delivering attractive financial returns as more impact funds mature and we see realisation over the medium term.

The resilience of valuations in our focus areas and the growth levers available to private equity specialists in the small/mid-market will remain very important and should also gain greater recognition in the year ahead. Therefore, my outlook across our key markets in private equity is positive for 2024, however, there remain significant macro headwinds that may limit investment growth including elections looming in sizeable economies.

What opportunities do you see going into 2024 and what are you most looking forward to?

There are two key areas that I am excited about for 2024: S&I and small/mid-market transactions. I have been delighted to see the growing levels of interest from LPs to invest into S&I funds. We are also supporting a number of LPs who are seeking bespoke, focused impact mandates targeting specific areas that are most important to them. We are seeing increasing specialisation in this part of the market, as GPs move away from generalist impact models to more focused approaches that draw on specific skills associated with such areas as the circular economy, energy transition or climate-focused strategies.

Within the small/mid-market, I believe the numerous value creation levers available coupled with low leverage will begin to deliver outperformance in this higher interest rate environment where financial engineering is less fruitful. We have seen over many years the superior returns in private equity that can be generated from the small/mid-sector specialists and I expect this to become even more pronounced in future years.

Check out the full interview for more of Lamacraft’s predictions for next year.

Approval

To finish up, a quick note to say that Searchlight Capital Partners has won court approval for its take-private of asset manager Gresham House.

You can read about the private equity firm’s plans for Gresham in this interview with Searchlight founding partner Oliver Haarmann.