Kohlberg Kravis Roberts & Co. agrees to buy IQGeo Group for £333 million
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LONDON: Geologist Bidco Limited, a newly formed company wholly-owned by funds advised by Kohlberg Kravis Roberts & Co. L.P. (KKR) reached agreement on the terms of a recommended cash acquisition of the entire issued and to be issued ordinary share capital of IQGeo Group Plc at the rate of 480 pence in cash/share.
The values the entire issued and to be issued share capital of IQGeo comes at approximately £333 million on a fully diluted basis and implies an enterprise value of approximately £316 million.
Eligible IQGeo shareholders have the option to choose the Alternative Offer instead of the Cash Offer, where they can receive shares in a new holding company (Topco) created for the acquisition. This option requires shareholders to commit their entire IQGeo shareholding, not just a portion. The value of Topco shares will be independently assessed and detailed in the Scheme Document. If dividends or capital returns on IQGeo shares are announced after this offer and before the acquisition’s completion, Bidco may adjust the cash or alternative consideration accordingly, allowing shareholders to keep such dividends or returns.
KKR has been evaluating IQGeo for several months, acknowledging its unique, modern product and experienced management. IQGeo is a key player in the growing geospatial software market, essential for telecom and utility operations.
KKR aims to help IQGeo transition to a recurring revenue model and develop new products privately. This sector is evolving with infrastructure transformations to meet connectivity and sustainability goals, necessitating significant investment from IQGeo, which may affect short-term profits but is vital for long-term growth and global scaling.
KKR, with its Global Impact and Technology Growth Funds, is well-equipped to support IQGeo’s growth in technology, organizational processes, sustainability, customer relations, international presence, and strategic mergers and acquisitions. As a significant investor in telecom and grid infrastructure, KKR’s acquisition will grant IQGeo access to its global network and resources, enhancing organic growth.
The offer to IQGeo’s shareholders provides a fair price amidst market volatility, reflecting the company’s solid past performance and KKR’s commitment to its future success.
IQGeo’s Board recommends Bidco’s acquisition offer based on the company’s strong financial performance and growth potential. The AIM listing has been instrumental in IQGeo’s development, with significant share price growth. However, to maintain momentum and capture long-term opportunities, substantial investment is needed in operations, technology, and acquisitions, which may introduce financial volatility and risk.
The Board conducted a competitive sale process, resulting in Bidco’s proposal as the most advantageous. The Cash Offer reflects IQGeo’s value and offers shareholders immediate, premium returns amidst market uncertainties. Bidco’s approach aligns with IQGeo’s future strategy and growth, emphasizing investment over leverage, which the Board views favorably for the company’s long-term success.
Commenting on the Acquisition, Richard Petti, CEO of IQGeo, added: “We are committed to the success of our customers and our employees. Thanks to them, we have built a thriving business that delivers award-winning innovative software for the telecommunication and utility industries worldwide. The proposed acquisition is in direct response to this success, creating an opportunity for us to accelerate investment in our people, processes, and products and increase our ability to respond to market momentum.
It’s also important to us that there is close cultural alignment between KKR’s Global Impact and Technology Growth funds with IQGeo’s focus on innovation and mission to bridge the digital divide and build the net-zero energy networks of the future. Their investment will underpin the next phase of growth of IQGeo’s exciting journey.”
Commenting on the Acquisition, Rami Bibi, Managing Director and Head of EMEA for KKR Global Impact, said: “In our view, IQGeo is unique in its support for continued global efforts addressing the digital divide and transforming grid infrastructure, which is aligned with KKR’s strong focus of investing behind grid electrification for net-zero goals. To capitalise on the global growth potential ahead, increased investment and an acceleration of IQGeo’s strategy are imperative, and private ownership under KKR will help facilitate this.”
Patrick Devine, Managing Director on the Tech Growth team at KKR, added: “KKR’s global platform and track record of scaling leading software businesses, combined with our experience of investing in telecom and grid networks gives us the right tools and capability to support IQGeo, and we look forward to working closely with its management team to capitalise on the long-term opportunity ahead.”
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