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                                                                                                                    +44 (0)7984 184 461

Cadarn

David Harris

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.