HG Capital takes majority stake in Valueworks

HgCapital acquired Valueworks in October 2012, in the first investment made by its Mercury fund, a vehicle raised the previous year to buy smaller technology, media and telecommunications businesses. The transaction valued the company at an enterprise value of £20m, of which 14.8 million pounds was contributed in equity by the fund’s investors, including 2.4 million from HgCapital Trust, the listed vehicle through which private and institutional investors participate in the firm’s deals. It was HgCapital’s tenth investment in software and its thirty-fourth in the United Kingdom. Valueworks operates a business-to-business marketplace for social housing repair and maintenance. Housing associations and local authorities that maintain large stocks of rented homes order constantly: taps, boilers, doors, paint, and the labour to fit them. Its platform connects those landlords and the contractors working for them with the merchants supplying the materials, handling the ordering, the pricing agreed under framework contracts and the invoicing that follows. Work of this kind had been managed on paper and by telephone, with each repair generating its own order and its own invoice, and the platform replaced that with a single system recording what was ordered, at which agreed price and against which job. The model earns a fee on the transactions passing through it, which gives it revenue proportional to its customers’ activity rather than to the software licences it sells. Volume depends on how many landlords and merchants use it: each additional landlord makes the platform more useful to merchants, and each additional merchant more useful to landlords.