When Shaun Maloney went home to New Zealand in 2010, having worked with a high-tech growth business in London, he came across “this little company, a medical imaging business based in Christchurch that found their way into the mining industry but didn’t know what to do with it,” he tells Buyouts.
What a CAT scan does for the interior of the body, the software offered by Seequent – then called ARANZ Geo – does for the subsurface of the earth, using data derived from drilling and radar to create 3D geological models. But the range of opportunities was potentially much wider: “Because I’m not a geologist, because I didn’t have those blinders on, I could see where the application could go.”
That included environmental uses, such as scanning for contaminants underground, as well as civil engineering applications. The importance of the latter was brought home by the deadly and destructive earthquake that struck Christchurch in February 2011. “The total addressable market has the great potential to grow,” Maloney says, “for all the wrong reasons, as we become aware of the fragility of the earth we’re on.”
A year after joining as global channel manager, Maloney was CEO with a plan for aggressive expansion. Wellington-based Pencarrow Private Equity invested in 2014, and that year Menlo Park’s Accel-KKR took notice.
“Some of the original investors, founders who were more focused on the medical side but still had a nice ownership stake, were realizing they had a pretty valuable business, [and were] looking to get liquidity.”
Tom Barnds, Accel-KKR
‘Opened our eyes’
Founder and co-managing partner Tom Barnds traces the firm’s interest back to a deal in 2004, when AKKR bought Alias, a provider of visualization software to the entertainment and automotive industries. “That really opened our eyes to this category of software modeling, algorithmic software where you are using advanced mathematics to develop visualizations of various things,” Barnds says. “That became a theme for us.”
Initially, ARANZ Geo was too small for AKKR. But the firm kept in touch. Meanwhile, the company rebranded as Seequent, reflecting its expansion beyond the mining and mineral niche, and undertook a major in-house marketing effort: “We invested heavily in high-quality videography around the world showcasing our customers, the diversity and the difference we were making,” Maloney recalls. “And we used that brand presence and leverage to attract these other founder-based businesses that wanted to be part of something.” That outreach would bear fruit once AKKR came onboard.
‘Third three-year plan’
With Seequent “looking to be a very successful investment for Pencarrow,” Barnds says, “some of the original investors, founders who were more focused on the medical side but still had a nice ownership stake, were realizing they had a pretty valuable business, [and were] looking to get liquidity.”
The deal took almost a year, in “a one-on-one dialogue, no bank involved,” which Barnds says is “the best kind of investment.” In 2018, AKKR became majority investor, cashing out everyone but Pencarrow and the management team. Terms were not disclosed. The transaction included a $32.5 million facility with Goldman Sachs.
By then, Maloney says, “we were on our third three-year plan,” which included options for acquisitions. Armed with AKKR’s capital, Seequent could execute on the inorganic component of its strategy. Toronto-based Geosoft was acquired two months after AKKR’s investment, expanding Seequent’s product offerings and end markets. Further analytical capability was added the following year with the purchase of Calgary’s GEOSLOPE.
“This market was big and being served by little founder-based businesses,” Maloney explains. “Rather than trying to compete against them, we built over the top of them.” Shaun Maloney, Seequent
Barnds says Maloney was able to make Seequent an appealing suitor to industry entrepreneurs: “Usually it’s a scientist, someone who had all these great thoughts in their head, turned it into software, but maybe was not going to get the company to the size of Seequent… And with founder-owned businesses, the employees are like family. If they’re going to sell the company, they want to sell it to someone with a shared set of vision and values.”
“This market was big and being served by little founder-based businesses,” Maloney explains. “Rather than trying to compete against them, we built over the top of them.”
During AKKR’s hold period, Seequent grew from 175 employees and 12 global offices to over 430 employees and 25 global offices. Revenue more than tripled, and EBITDA expanded 15x. In June 2021, less than three years after investing, the firm sold Seequent to Nasdaq-listed Bentley Systems for $900 million in cash and 3.1 million shares of stock. The total value of the deal was $1.05 billion. PE Hub reported a 12x return for AKKR.
The Winning Numbers: Accel-KKR
Total value of Accel-KKR’s sale of Seequent
Seequent’s staff count at the end of AKKR’s hold period, up from 175
AKKR’s return on the deal