Australia's Elmo Software agrees take-private with US GP
K1 Investment, a US-based private equity that focuses exclusively on enterprise software companies, has agreed to acquire Australia-listed Elmo Software at a valuation of AUD 483m (USD 313m).
The target company, which provides cloud-based human resources and payroll software solutions, confirmed a fortnight ago that it had been approached by numerous prospective acquirers, including private equity. It identified Accel-KKR as one of the suitors.
K1 has agreed to buy all outstanding shares in Elmo for AUD 4.85 apiece through a scheme of arrangement. It represents a 100.4% premium to the company’s trading price on October 12, immediately prior to the disclosure of buyer interest. Elmo’s stock closed up 40% at AUD 4.64 on October 26, giving the company a market capitalisation of around AUD 463m.
Two of the largest shareholders, JLAB Investments and Garber Family Trust, have said they will sell their positions through the scheme, according to a filing. Danny Lessem, Elmo’s CEO and co-founder, will work with K1 to move the transaction forward. He owns 11% of the company and will roll over approximately 70% of that interest into the acquisition vehicle.
Founded in 2002, Elmo offers customisable cloud HR, payroll, and rostering solutions, accessible via a single dashboard and single user interface. The goal is to streamline processes with a view to increasing productivity and efficiency and reducing costs. Its brands include PeoplePulse, Pivot, HROnboard, Vocam, Webexpenses, and BreatheHR.
Revenue – most of it generated by corporate customers in Australia, New Zealand, and the UK – reached AUD 91.4m in the 12 months ended June 2022, up from AUD 69.1m a year earlier. Annualised recurring revenue, which is nearly all subscription-based, rose from AUD 83.8m to AUD 108.2m.
Elmo’s underlying EBITDA was AUD 7.1m, up from AUD 600,000, but its net loss widened from AUD 37.6m to AUD 76.8m.
Based in Los Angeles, K1 has backed more than 200 enterprise software companies since inception and closed 34 investments in the past 12 months alone. Its fifth fund closed on USD 3.9bn in late 2020. The firm employs 140 professionals and claims hundreds of portfolio companies – with a cumulative annual recurring revenue of USD 2.6bn.
Australian representatives include SimPro, a contractor-focused software-as-a-service (SaaS) provider, and Cyara, a customer experience assurance platform. RosterLive, a workforce management app, and OpenCities, a customer experience player that serves governments, were exited in 2013 and 2021. New Zealand-based legal app developer McCarthyFinch was sold in 2020.
Elsewhere in Asia, K1 is invested in two companies with a strong presence in India: RRPIO, which streamlines request for proposal (RFP) processes, and Hiver, a Gmail-based customer service solution.
More on Australasia
Latest News
Asian GPs slow implementation of ESG policies - survey
Asia-based private equity firms are assigning more dedicated resources to environment, social, and governance (ESG) programmes, but policy changes have slowed in the past 12 months, in part due to concerns raised internally and by LPs, according to a...
Singapore fintech start-up LXA gets $10m seed round
New Enterprise Associates (NEA) has led a USD 10m seed round for Singapore’s LXA, a financial technology start-up launched by a former Asia senior executive at The Blackstone Group.
India's InCred announces $60m round, claims unicorn status
Indian non-bank lender InCred Financial Services said it has received INR 5bn (USD 60m) at a valuation of at least USD 1bn from unnamed investors including “a global private equity fund.”
Insight leads $50m round for Australia's Roller
Insight Partners has led a USD 50m round for Australia’s Roller, a venue management software provider specializing in family fun parks.