U.K. private equity firm Hg is reportedly set to acquire small business payroll software company Personal & Informatik (P&I) several years after first acquiring the firm then divesting a majority stake.
Reports in the Financial Times (FT) said Hg had first acquired P&I, based in Germany, in 2013 from Carlyle. At the time, P&I was valued at about $485.8 million. Three years later, the company divested a majority stake in P&I to Permira, a deal which valued the firm at up to $998.1 million, reports said, citing unnamed sources.
Hg plans to again acquire P&I, although Permira will reportedly retain a minority stake in the company.
It’s unclear how much Hg would pay to regain the payroll company, which is in the midst of a cloud migration for its payroll software. Reports said Hg believes this embrace of the cloud will drive the company’s valuation up as it adopts a subscription-based payments model and as more businesses adopt subscription services, potentially limiting their risk for switching providers.
“The thing that’s important to me is that we support P&I on this journey [to cloud computing],” said Hg director Michael Biehl in an interview with the FT. “At the same time we’re exploring expansion in continental Europe.”
He added that P&I may eventually go after an initial public offering, or it could be sold to another private equity group.
According to reports, Hg’s re-acquisition of P&I is one of several so-called “pass the parcel” deals, with acquirers pointing to their history with and familiarity of takeover targets as an opportunity to drive growth.
Last month, another U.K. firm, The Access Group, announced two acquisitions in the payroll arena, that of People HR and of Payroll Service Company, a deal that enables The Access Group to expand its payroll offering.
Earlier this month, FLEETCOR Technologies also announced a payroll acquisition, having reached an agreement to takeover SOLE Financial.
