Today The Foundry announced a majority investment from HgCapital, one of the UK’s most prestigious private equity firms. HgCapital are perceived as one of the top investors in European software, and are known as a company that invests with a longer planning horizon. The Foundry will sit within their Technology, Media & Telecommunications (‘TMT’) sector. Under the terms of the deal, HgCapital will assume majority ownership from The Carlyle Group for an enterprise value of £200 million ($312 million USD).
This does not mean Carlye Group got a check for £200 million, but as the former majority shareholder they sold their shares in a deal that values the company at £200 million. This means the management team that still had a minority shareholding are still very much in the company with their (newly re-valued) shareholding. Why does that matter? It speaks to the fact that it will be business fairly much as usual at The Foundry.
We spoke to Bill Collis, chief executive officer of the Foundry, in London and confirmed that all the senior management will continue in their current roles. Which begs the question, why sell? “The Carlyle Group, who have been great, sold – which is a natural part of the business cycle, they invest in companies with a certain planning horizon, which is fine. The great news is that HgCapital tend to grow companies and build them over the long term”.
Collis pointed out the the primary (lead partner) at HgCapital Nic Humphries had been with HgCapital for over 25 years and his proudest aspect of the company is how many jobs they have created, how much they build companies and that they are very keen to support what Collis calls an “independent Foundry”. Most investments “they normally keep, some for over a decade,” he added. “HG is not a low cost operator’ meaning they are not a company that seeks to buy, bleed money out of a company or cut down or sell parts off in pieces”, all of which is great news for Foundry customers.
The Foundry has always really grown ‘organically’ explained Collis. This deal, while greatly underling the success and strength of the Foundry, is not a cash injection. It does however mean that the management team are free to now once again focus on the Foundry and resume any M&A activity that may have needed to take a back seat during the sale. Acquisitions are certainly very much a way the Foundry may grow further and Collis, while not able to name companies, pointed to “two or three” projects that the team would now be looking at moving forward.
The valuation comes after a previous ‘leak’ that Adobe was interested in The Foundry for exactly the same amount. From what fxguide can indicate, while the number turned out to be accurate, the reports of Adobe as a buyer were a complete rumor. It is not the case that there was a two horse race between HgCapital and Adobe or that Adobe was a major bidder against HgCapital.
While Collis encourages any customer to contact him, or any of The Foundry management team, his bottom line is that he honestly believes a stable well backed “Independent Foundry” delivered by this deal is great news for customers, for his staff and the management team.
“Knowing the direction we plan to take The Foundry, we identified that HgCapital was the ideal partner to build on what The Carlyle Group have helped us achieve,” Collis said in a release. “Nic and his team have such deep software experience, take a long term view on investing and have an amazing track record in taking already solid companies to even greater levels of success. HgCapital achieve this through investment, both in R&D and people, with a deep respect for customer loyalty and satisfaction.”
“With this deal, we remain one of the few independent companies solely focused on creative industries. This lets us pursue our best-in-class strategy, prioritizing research and innovation; and teaming with other companies to create powerful collective solutions.”
“There are so many elements about The Foundry that we find attractive, not the least of which is the core management team,” said Nic Humphries. “This is a company that constantly innovates, both in terms of their technology, as well as their business. Bill and his team love nothing more than running head on into the challenges facing creative industries, developing exciting disruptive technologies that have huge potential.”
A photo taken yesterday around the corner from the UK headquarters in the heart of London and shows (a now relaxed but very happy), Brad Peebler (Foundry USA), Bill Collis, Nic Humphries and Simon Robinson (co-founder)
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