Hg Capital Announces Investment in IFS and WorkWave

The News: Hg Capital announced this week that it will become a significant minority investor in IFS and WorkWave. The transaction amount is undisclosed but the valuation for IFS and WorkWave is $10 billion. EQT, the existing majority shareholder and TA Associates, an existing minority shareholder, will remain investors as well. Read the full Press Release.

Hg Capital Announces Investment in IFS and WorkWave

Analyst Take: This investment, while we don’t yet know the amount, is a promising sign for IFS’ continued growth, which has been impressive over the last few quarters. The capital and experience from Hg will be used to help both IFS and WorkWave expand in their existing markets, further accelerating growth.

IFS has seen a strong path to growth over the past couple of years. It was valued at $3 billion in July of 2020 and is now valued at $10 billion. And despite being a private company, IFS does provide regular updates on financial performance, which serves as a helpful backdrop to its path to the increased valuation. I am a fan of the transparency as the company continues to grow and increase its share in key markets as a leading solution for ERP.

The Hg investment at face value fits well for both Hg and IFS. Hg has significant experience in the enterprise software market with investments in several other companies in the sapce. They also have a proven track record of guiding growth of companies in their investment portfolio through acquisitions so it will be interesting to see if that becomes a key strategy for IFS and WorkWave in the coming years.

IFS has continued to build a high-quality cloud business, with impressive technology. I’m especially positive about its focused growth and targeted end-markets. This has helped the company build a strong foundation of employees and partners who are committed to driving innovation and success – indicating that the trajectory of the company is upward for the near to midterm.

Growth Continues

As I mentioned above, IFS, led by Darren Roos, has experienced tremendous growth in the last few years. This continued growth in a highly competitive and fragmented market should be viewed as indicative of the company’s solid leadership. I had the chance to speak with Roos on a recent episode of Making Markets where he shared that they’ve experienced 4 consecutive years of double-digit growth

The cloud and ERP software market is crowded and in many ways top heavy with massive technology companies that have deeply established customer bases, however, IFS is definitely making a name for itself. A recent partnership with BearingPoint and this latest round of investment leads me to believe that the growth is not over yet. We will have to continue to monitor IFS closely this year to see if any acquisitions take shape or if they are eyeing something bigger like a potential IPO — both could be excellent possibilities for a company looking to expand its reach in the market.

Disclosure: Futurum Research is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

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Image Credit: IFS

The original version of this article was first published on Futurum Research.