Hg announces strategic investment in CINC Systems

HgCapital Trust PLC

14 December 2023

 

Hg, the Manager of HgCapital Trust plc ("HGT"), today announces an investment CINC Systems ("CINC"), a leading cloud-based software company serving the community association management sector. The terms of the transaction are not disclosed.

HGT will invest approximately £13.6 million in CINC, with other institutional clients of Hg investing alongside HGT through the Hg Mercury 4 Fund.

HGT, whose shares are listed on the London Stock Exchange, gives private and institutional investors the opportunity to participate in all Hg's investments.

Note that these figures only relate to HGT's share of Hg's overall investment in CINC.

HGT's liquid resources available for future deployment (including all announced transactions, the undrawn bank facility and the interim dividend paid in October 2023) are estimated to be £746 million (33% of the pro-forma 30 September 2023 NAV of £2.3 billion).

The investment will reduce HGT's outstanding commitments to invest in Hg transactions to approximately £1.0 billion (44% of the pro-forma 30 September 2023 NAV).

CINC Systems secures meaningful strategic investment from Hg
to accelerate its growth as a premier software provider to the community association management industry

-     Hg will become a strategic growth investor in the business alongside CINC's founder, Bill Blanton, its management team and current investors, Spectrum Equity.

-     The new investment follows a significant year of growth for the business, with record new bookings and 50% revenue growth in 2023.

-     Tom Kiernan, former CEO of ClickPay, will join the Board as part of the transaction, bringing additional industry expertise and relationships, as well as experience in constructing easy-to-use payment platforms for homeowners.

DULUTH, Ga, USA and New York, USA.  December 14, 2023. CINC Systems ("CINC"), a leading cloud-based software company serving the community association management sector, today announced it has secured a strategic growth investment from Hg, a leading investor in European and North American software and services businesses.

On completion of the transaction, Hg will become a strategic shareholder in the business, investing alongside CINC's founder, Bill Blanton, and its management team, as well as current investors Spectrum Equity.

CINC is a leading provider of accounting, homeowner management, bank integrations and payments software for the association management industry, comprised of homeowner association ("HOA") and condominium associations. Founded in 2005, CINC has built a leading SaaS platform for this sector, serving more than 4 million units across about 35,000 associations and nearly 800 management companies, with deep integrations and strategic partnerships with more than 30 partner banks.

CINC recently announced the launch of several ground-breaking innovations for the industry at its annual user conference CINC Up, including the introduction of artificial intelligence ("AI") in its management company-branded homeowner apps. The technology allows homeowners to use their apps to ask simple questions that bog down association managers - and receive informed answers in return.

Bill Blanton, CINC Systems Founder and Chairman, said: "I'm proud that our achievements have attracted the attention of two globally renowned SaaS-specialist investors. The addition of Hg's expertise in expanding top-tier software businesses, complemented by Spectrum's support, places us in an advantageous position to keep innovating our products to better serve our clients, add new clients and expand our reach."

Ryan Davis, Chief Executive Officer of CINC Systems, said: "This is a really exciting day for us all. With Hg's expertise, our foundation in this sector is now stronger than ever. The wealth of experience and knowledge that this collaboration brings, puts us in the perfect position to innovate and augment our product."

CINC has scaled rapidly in recent years, investing to ensure fast-paced product innovation, a robust customer success team and enhanced sales and marketing efforts.  This has resulted in a significant year of growth in 2023, with record new bookings and approximately 50% revenue growth. Today, its all-in-one software, bank integration and payments technology solution adds significant value to all participants in the HOA ecosystem, with more than $7 billion of annual payment volume being managed through its platform.

Hg brings significant sector expertise to CINC. Over the last 19 years, the firm has invested around $10 billion in the wider tax and accounting software segment across Europe and North America. Hg will use this experience to support the business, with continued investment in CINC's go-to-market strategy and further innovation in new product launches, building on the momentum of the AI product launches, TresRE and VendorPay earlier this year.

Tom Kiernan, former CEO and co-founder of ClickPay, one of the industry's leading payment platforms, will join the board as part of the transaction. This appointment will add Kiernan's industry knowledge, strong relationships and deep payments expertise to help further strengthen the leadership team and support the business as it continues to rapidly grow.

Farouk Hussein, Partner at Hg, said: "Our extensive work confirms CINC's product leadership as a system of record in this sector. It has a highly differentiated, purpose-built integrated solution for banking and accounting in a growing segment that is only in the very early innings of software adoption. We look forward to backing Ryan and partnering with the existing shareholders and management team to continue driving the CINC success story."

Mike Farrell, Managing Director at Spectrum, said: "We've had a great partnership with Bill, Ryan and the entire leadership team at CINC. They've established CINC's enviable position in the market, and we are excited to continue to support them, and collaborate with Hg, as the company enters its next phase of growth."

Raymond James is acting as exclusive financial advisor to CINC and Spectrum Equity, and Troutman Pepper and Latham & Watkins LLP are acting as their legal advisors. Harris Williams is serving as exclusive financial advisor to Hg and Kirkland & Ellis LLP is serving as its legal advisor.

The terms of the transaction have not been disclosed.

For further details:

Hg

Tom Eckersley                                                                                                                    [phone]

HgCapital Trust

Laura Dixon                                                                                                                        [phone]

Brunswick

Azadeh Varzi                                                                                                                      [phone]

[e-mail]

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, CINC System and Spectrum Equity websites are not incorporated into, and do not form part of, this announcement.

 

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