HESTA backs PEP-owned Australia software business
HESTA has acquired a A$120 million ($85 million) equity stake in Australian enterprise software and IT services provider Citadel, following its merger with medical practice software specialist Genie Solutions.
Citadel was taken private last year by Pacific Equity Partners (PEP) at an equity valuation of A$448.6 million, or 14.7x EBITDA. The company concentrates on large enterprise deployments in the healthcare and defense sectors. It is a market leader in Australia for public pathology and oncology data management, and in the UK for radiology and maternity data management.
Genie has two practice management products – desktop-based Genie and cloud-based Gentu. IFM Investors acquired the company for about A$55 million in 2017 and sold it to Citadel instead of pursuing an IPO that was expected to be worth around A$250 million.
HESTA had exposure to Genie through its separately managed account with IFM. The superannuation fund also has an existing relationship with PEP and an LP in the private equity firm’s Secure Assets Fund, which targets companies that generate annuity income but also offer opportunities for traditional private equity-style operational improvement.
HESTA reinvested the bulk of the proceeds from the Genie sale into Citadel. It said that Citadel represents a natural fit, given many of its 900,000 members are frontline workers in healthcare and community services.
“HESTA’s deep relationships across the fast-growing healthcare sector gives us a unique investment perspective that’s helping to deliver outstanding investment performance for our members,” Sonya Sawtell-Rickson, CIO at the superannuation fund, said in a statement.
“Through our long-term relationships with leading investment managers, we’re focused on investing in innovative companies that are developing the technologies and growth industries of the future that’s also contributing to strong long-term returns for members.”
Other recent activity in Australia’s clinic management software space includes Affinity Equity Partners selling MedicalDirector to Telstra Health for an enterprise valuation of A$350 million. Affinity acquired the business in 2016 for A$155 million.
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