Private Equity Firm HgCapital Continues To Expand Its Portfolio

Despite the economic downturn and the havoc wreaked by the global pandemic, London-based private equity firm HgCapital has shown no signs of slowing down.

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In the last eight months, the firm has invested in Intelerad Medical Systems, smartTrade, and European sector leader for emergency notifications, crisis and incident management, F24.

HgCapital’s latest investment is in Sovos, a leading global provider of software that safeguards businesses from the burden and risk of modern transactional taxes. Together with TA Associates — a leading global private equity firm with almost 50 years of experience in software investments — the firms have injected an undisclosed amount of money into the tax compliance software provider.

HgCapital first invested in Sovos in 2016. The private equity firm purchased a majority stake in the company from Vista Equity, which then retained a significant minority position in Sovos. Since then, Vista has exited its investment in full. Its latest investment sees HgCapital gain a majority investment in Sovos.

As part of the investment, HgCapital will work closely with the management team and Vista to accelerate the software company’s robust organic growth as well as support future mergers and acquisitions to build “a global champion.”

“HgCapital’s investment presents a significant opportunity to build on our success and accelerate the development of our global platform for tax compliance and reporting,” said Andy Hovancik, Chief Executive Officer of Sovos. “With the support of Vista Equity Partners, Sovos transformed into a trusted partner for companies navigating today’s dynamic regulatory environment.”

Headquartered in Boston, Massachusetts, Sovos leverages more than 210 million tax rules in over 13,500 jurisdictions to service people in more than 200 countries. Since its inception, the company has grown substantially. Sovos has acquired over 10 companies, more than doubled its customer base, and has added 1,000 employees to locations in 10 countries.

Founded in 1979, Sovos (formerly Taxware) uses the Sovos Intelligent Compliance Cloud, which combines world-class regulatory analysis with a cloud software platform to create an adaptable, connected, and global compliance solution that keeps businesses ahead of the ever-changing regulatory environment.

Deloitte served as financial adviser to Sovos, and Skadden and Akol provided legal counsel. Sovos generated around $125 million in EBITDA during its 2020 fiscal year ending June 30. The company posted around $300 million in revenue over the corresponding period.