European private equity firm Cinven today announces that it has completed the acquisition of Northgate Public Services (‘NPS’), a leading provider of software, outsourcing and IT services to local government and public sector organisations, for an undisclosed amount.

NPS provides software and related services to UK public sector markets including Local Government, Government Agencies, Public Safety, Housing and Healthcare. Its software and services are used by over 400 UK local authorities, all UK police forces, social housing providers in the UK and internationally, and NHS hospitals. Its IT projects support the sharing of information for criminal intelligence and investigations across UK police forces and the management of health screening records in the UK and in Ireland.

For the 12 months to 30 April 2014, NPS grew revenues by 7.2% and EBITDA by 6.9% to £181.0 million and £42.0 million respectively and has shown a sustained track-record of growth.

Cinven’s TMT team regards NPS as an attractive investment on the basis of the company’s:

 

  • well-placed market positioning with a variety of niche software applications across the UK public sector;
  • stable revenues resulting from the embedded and vital nature of its software products within its customers;
  • well diversified business with a customer base across local and central government, police and healthcare;
  • potential growth into other related areas given NPS’ investment in a modern, Software-as-a-Service (‘SaaS’) eligibility platform which is applicable across the public sector in the UK and internationally. As a result, public sector organisations can migrate at low risk to flexible and modern IT solutions.

 

David Barker, Partner at Cinven, said:

“We are very pleased to be working with the Northgate Public Services management team. NPS is a highly cash generative and defensive software business with market-leading positions in the UK public sector. We are excited to have the opportunity to invest in NPS as a standalone business and grow further into attractive niche markets, such as healthcare screening and the police, where the company has a good existing foothold.

“Cinven’s Fifth Fund has made several investments in Technology, Media and Telecommunications (TMT) including HEG, Visma and Ufinet. Our strong track record in the sector will allow us to share and implement best practices and insights with NPS to support the growth of the business.”

Chris Good, Principal at Cinven, added:

“The continued pressure on UK public spending is forcing both local authorities and central government bodies to increase their use of software-enabled services and improve productivity. Various factors are fuelling the demand for NPS’s unique suite of products and services, in particular, the transformations in policing and healthcare; with the digitisation of public sector information accelerating and public bodies keen to interact more effectively and directly with citizens. We will also actively look at opportunities to expand the business internationally in markets including Canada, the US and Australia, where NPS already operates.”

David Meaden, Chief Executive of Northgate Public Services, said:

“Working with Cinven will further fuel our ambition to innovate and grow and is a huge vote of confidence in the strength of our business and our people. For many years we’ve worked hand in hand with local authorities, police forces, health and housing providers, as well as government departments, to help them keep communities safe and thriving.

“Public finances are under pressure all over the world, and we have unique expertise in helping organisations meet this challenge. We now have the power and the opportunity to help even more organisations transform the service they provide to the public and get ready for the challenges to come.”

Founded in 1969, Northgate Public Services is headquartered in Hemel Hempstead, Hertfordshire in the UK. It employs more than 1,500 people in the UK across 10 offices and more than 750 people internationally including in its software development centre in Mumbai.

NPS represents the 10th investment from Cinven’s Fifth Fund.

Advisors to Cinven on this transaction included DC Advisory (financial); Freshfields; Deloitte and Bain and Company.

NPS was previously part of Northgate Information Solutions, which remains owned by KKR.