HgCapital cashes in on Orbiscom

UK mid-market outfit HgCapital has opened 2009 with an exit by selling software company Orbiscom for approximately US$100m to credit card giant MasterCard.

Ireland-based Orbiscom specialises in providing software to the global payments industry, with customers including Discover card, PayPal, and its new owners.

“We are pleased to solidify our relationship with Orbiscom,” said Robert W. Selander, MasterCard president and CEO. “By adding Orbiscom’s expertise, intellectual property and talented team of innovative payments-industry professionals to MasterCard, we will further accelerate the development of new payment solutions for our customers. As part of this agreement, Orbiscom’s existing customers, which include leading financial institutions, will receive continued support for current Orbiscom products and the opportunity for new capabilities to help them develop new payment solutions.”

The sale is HgCapital’s 16th since the start of the credit crisis in June 2007, which has seen the firm realise £1.2bn, with an average multiple of 2.7x. The exit generated just 1.8x for the firm, which acquired the business in the dark days of 2001, backing CEO Garry Lyon’s management buyout with US$17.5m. HgCapital subsequently wrote down the investment.

Ian Armitage, chairman of HgCapital, said: “Orbiscom was one of a number of technology investments we made after the collapse of the technology boom in 2001 and 2002, which have proved extremely successful overall, thanks to our sector specialisation and the quality of management we have backed.”

The sale of the Dublin-headquartered business is the last of HgCapital’s dot.com investments, and one of the few remaining in the MUST4 portfolio, the US$770m fund closed in 2000.

Other internet boom acquisitions included Global People Network, a company which produced software for recruitment agencies for matching vacancies to staff; Trados, a US company specialising in translation software for businesses; and Axiom, a producer of software for the telecoms industry.

Armitage said: “Looking ahead, we appear to be entering a buyers’ market for corporate assets once more, with valuations at a 20-year low. High quality businesses will require fresh investment and supportive investors and this provides ample opportunities for private equity firms such as HgCapital, which have both available capital and deep industry experience.”