US strategic to buy PE-backed Australia payroll business

Financial details were not disclosed, although the deal is estimated to be worth more than A$500 million ($382 million) based on Ascender’s revenues and earnings, according to The Australian Financial Review. Potentia was said to be marketing the company for a A$500 million IPO last year, touting annual revenue of around A$100 million.

Potentia and Five V jointly acquired 100% of Ascender in 2015 for an undisclosed sum. Potentia targets companies with enterprise valuations in a range of A$50-300 million, while Five V’s sweet spot is A$20-150 million. At the time, both private equity firms were relatively young and pursuing investments on a deal-by-deal basis. 

During the holding period, Ascender grew from a domestic focus to a footprint of 31 countries across Asia Pacific. It now claims to supply payroll and HR tech to more than 1,200 global brands and listed companies with 1.3 million employees

The transaction, expected to close in the second quarter of 2021, represents an aggressive Asia expansion for Ceridian, a New York and Toronto-listed category leader with a market capitalization of $14.2 billion. It will bring Ceridian’s regional exposure to 1,500 clients with 2.5 million employees.

“APJ [Asia Pacific Japan] is the fastest growing region for payroll and HCM [human capital management], and Ceridian is uniquely positioned to support organizational leaders driving transformation in today’s rapidly changing world,” Stephen Moore, regional head of Ceridian, said in a statement. “We look forward to serving more customers in the region with Ceridian’s award-winning products and expanding the breadth and depth of our leadership team.”

Potentia was founded by ex-MYOB CEO Tim Reed and former Francisco Partners executive Andrew Gray in 2014. The firm recently closed its debut fund - which targets tech-based models - with A$380 million in commitments. Five V was established in 2013 by Adrian Mackenzie, formerly of CVC Capital Partners, and raised A$350 million for its third fund in 2019. Both GPs are Sydney-based and focused on companies in Australia and New Zealand.

Investment interest in Australia’s workforce management space has boomed in the past two years, with some 10 local start-ups receiving significant private equity, venture, and strategic backing. Local leaders include Culture Amp, which has raised $158 million to date, and Employment Hero, which has raised at least A$100 million and counts jobs marketplace Seek as an investor.

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• Topics
• Australasia
• Exits
• Trade sale
• Support services
• Australia
• Potentia Capital
• Five V Capital
• professional services