Hg Capital Trust Shares Rise After Agreeing to Sell Partial Stake in IRIS Software to Private Equity Firm

London-listed Hg Capital Trust's (LON: HGT) shares are up over 2% Wednesday after it announced the partial sale of Iris Software Group in a press release.

IRIS Software Group, a provider of software for accountancy, payroll, HR, and education, has secured a co-controlling investment from US private equity firm Leonard Green & Partners (LGP). The deal, valuing IRIS at £3.15 billion, marks one of Europe's biggest software buyouts for 2023 and supports IRIS's expansion plans in North America.

LGP will join alongside existing investor Hg, who is reinvesting in the business. ICG will remain a minority shareholder.

This backing underscores IRIS's track record, with the company claiming 80% of customers stay loyal for at least five years. IRIS has been able to deliver 20% annual growth in both revenue and EBITDA. Today, North America accounts for over 25% of the group's revenues.

Elona Mortimer-Zhika, CEO of IRIS, sees LGP's investment as a pivotal moment: “To secure backing from a leading US investor in LGP, alongside the continued support of Hg and ICG, underscores IRIS's enduring success over many decades.”

“We have also expanded our country presence with a notable focus on the US, so LGP's local expertise will be instrumental in our acceleration to a world-class transatlantic business,” she added.

Usama Cortas, Partner at LGP, expresses enthusiasm for the partnership, stating they are “incredibly excited” to partner with the company and look forward to working with Hg and ICG.

For Hg, who invested in IRIS back in 2004, the partnership marks a new stage in growth for its investment. They've invested extensively in the tax and accounting software sector, with IRIS playing a central role.