REG - HgCapital Trust PLC - Hg announces a recapitalisation of Citation Group

HgCapital TrustAnnouncement

19/12/2024 07:00

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RNS Number : 6636Q  HgCapital Trust PLC  19 December 2024

Hg, the Manager of HgCapital Trust plc ("HgT"), today announces a
recapitalisation of The Citation Group, an international provider of
tech-enabled compliance and certification solutions to small to medium-sized
enterprises.  As part of the transaction The Citation Group will welcome
HarbourVest Partners, a global private markets investment manager, as a new
investor in the business

 

The terms of the transaction have not been disclosed and is subject to
customary conditions and regulatory approvals.

 

HgT, whose shares are listed on the London Stock Exchange, gives private and
institutional investors the opportunity to participate in all Hg's
investments.

 

This transaction values HgT's investment in The Citation Group at
approximately £45.1 million. This would represent an uplift of £3.5 million
(8% or 0.8 pence per share) over the carrying value of £41.6 million in the
Net Asset Value ("NAV") of HgT at 30 September 2024. HgT will receive a net
realisation of approximately £13.5 million from The Citation Group, having
re-invested a portion of its proceeds in the business alongside other
institutional clients of Hg. HgT's exposure to The Citation Group will be
£31.6 million at closing representing approximately 1.3% of NAV.

Note that these figures only relate to HgT's share of Hg's overall investment
in The Citation Group.

Based on the 30 September 2024 reported NAV, the pro-forma NAV of HgT is
expected to be £2.4 billion (or 523.6 pence per share).  HgT's available
liquid resources, which includes the undrawn bank facility of £277 million
for future deployment (including all announced transactions and the interim
dividend paid in October) are estimated to be £450 million (19% of the
pro-forma 30 September 2024 NAV). The investment will reduce HgT's outstanding
commitments to invest in Hg transactions to approximately £649 million (27%
of the pro-forma 30 September 2024 NAV).

 

Citation welcomes new investment from HarbourVest Partners

supporting its growth as a global provider of SME compliance and certification
solutions

 

-       HarbourVest Partners joins forces with Hg and KKR to propel
Citation's growth ambitions, international expansion and innovation in AI.

 

-       The strategic partnership will back CEO Chris Morris and his
team as they continue to support the compliance needs of over 110,000 SME
customers across the UK, Australia and Canada.

 

London, UK - December 19, 2024: The Citation Group (Citation), an
international provider of tech-enabled compliance and certification solutions
to small to medium-sized enterprises (SMEs), today announce that they have
welcomed HarbourVest Partners (HarbourVest), a global private markets
investment manager, as a new investor in the business. This new chapter of
investment will see HarbourVest join forces with the management team and
majority investors, KKR and Hg, to bolster Citation's international growth
trajectory - organically, through product development in AI and through
strategic acquisitions.

 

Citation supports SMEs in the UK, Canada, and Australia, acting as a critical
partner for over 110,000 SMEs businesses navigating the complexities of HR,
Health and Safety, and Quality Certifications.

 

Chris Morris, CEO of Citation, said: "We're thrilled to welcome HarbourVest as
our new strategic partner. Their expertise, along with the continued support
from Hg and KKR, will be instrumental as we pursue our vision of simplifying
compliance for SMEs globally. Our focus remains on providing peace of mind to
business owners, allowing them to concentrate on growing their enterprises,
while we protect their people, their businesses and their reputations."

 

This transaction follows a period of sustained and rapid growth at Citation,
in which the Group has benefited from its leading quality and the breadth of
its mission-critical compliance solutions, as well as its hybrid approach in
leveraging both software and services to optimally serve its customers'
compliance needs. In the last four years, Citation has entered Canada and
Australia - now jointly representing c.20% of revenue, and consistently stayed
in excess of "rule of 40" economics.

 

Gonçalo Faria Ferreira, Managing Director at HarbourVest, said: "We are
excited to become a  strategic partner to Citation, joining Hg and KKR to
support the Group's continued growth. Having followed the business for several
years, we are impressed by what Chris and his team have achieved. We see
strong potential for the business going forward as it continues its mission to
simplify compliance for SMEs."

 

Joris Van Gool and Nick Jordan, Partners at Hg, said: "Citation stands as a
testament to what can be achieved with the right team, technology and
strategic partners. The addition of HarbourVest to the fold marks an exciting
new phase for Citation, as we continue to unlock the immense potential within
the SME compliance space." Hans Arstad and Rami Bibi, Managing Directors in
KKR's European Private Equity and Global Impact teams, added, "We're excited
to welcome HarbourVest as Citation continues its strong growth under Chris and
the team. Together, we'll further expand Citation's reach and enhance its
offering through strategic acquisitions and innovation, positioning the
business for continued success."

 

The transaction details have not been disclosed. Jefferies acted as financial
advisors to Citation Group, Hg and KKR.

 

For further details:

 

Hg

Tom Eckersley
 
 +44 (0)208 148 5401

 

HgCapital Trust

Laura Dixon and George Crowe
 
 
+44 (0)20 8396 0930

 

Cadarn

Lucy Clark

lucy@cadarncapital.com (mailto:lucy@cadarncapital.com)
 
 
                                                +44
(0)7984 184 461

 

Cadarn

David Harris

david@cadarncapital.com (mailto:david@cadarncapital.com)
 
 
                                                +44
(0)7368 883 211

 

About HgCapital Trust plc

 

HgCapital Trust plc, whose shares are listed on the London Stock Exchange
(ticker: HGT.L), gives investors exposure through a liquid vehicle to a
portfolio of high-growth private companies in the software and services
sector. The selection of new investments and creation of value in these
businesses are managed by Hg, an experienced and well-resourced private equity
firm with a long-term track record of delivering superior risk-adjusted
returns for its investors. For further details, please see
www.hgcapitaltrust.com.

 

The contents of the Hg, HgCapital Trust, KKR, The Citation Group and
HarbourVest Partners websites are not incorporated into, and do not form part
of, this announcement.

 

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