• The London-based business software maker recently disclosed the deal, specifying that Leonard Green is acquiring a co-controlling stake in collaboration with the current investor, Hg.
  • Iris offers applications utilized by organizations for tasks related to accounting, payroll, and human resource management.

Leonard Green and Partners, a private equity firm, has invested in Iris Software Group Ltd. at a valuation of £3.15 billion, equivalent to approximately USD 4 billion.

The business software maker based in London revealed the agreement recently, indicating that Leonard Green is acquiring a co-controlling stake in collaboration with the current investor, Hg. Iris highlighted that this transaction marks “one of the largest software buyouts in Europe for 2023.”

Earlier this month, Bloomberg disclosed that KKR had shown interest in acquiring Iris. By December 12, reports indicated that the private equity firm was engaged in advanced discussions for a deal valued at over £3 billion. Ultimately, Leonard Green seems to have presented a more competitive offer.

The fact that Iris reportedly received offers from several potential buyers might have contributed to an increased valuation during the sales negotiations. The current valuation of the software maker in the Leonard Green deal is £3.15 billion, surpassing its worth of £1.3 billion in May 2018—reflecting a valuation more than double its previous figure. In May 2018, the software maker sold a stake to London-based investment firm ICG, which will continue to be a shareholder following the recent investment.

Its consistent growth is another element potentially influencing the rise in Iris’ valuation since 2018. In last week’s investment announcement, the software maker revealed a compound annual growth rate of 20% in its revenue. Additionally, it asserts a similar upward trajectory in earnings before interest, taxes, depreciation, and amortization.

Iris offers applications designed for organizations to carry out accounting, payroll, and human resource management functions. The company is active in various markets, and its portfolio features a parent engagement app utilized by approximately 12,000 schools and academies in the U.K., among other offerings.

It provides both on-premises and cloud-based applications in all of the main market categories in which it competes. In recent years, certain products from the company, including the IRIS Financials accounting platform, have been enhanced with machine learning features. These capabilities are specifically crafted to streamline and automate routine manual tasks for finance teams.

Iris asserts that its applications have garnered adoption from over 100,000 organizations globally. Notably, the company holds a robust foothold in the U.K., with its payroll software supporting one-sixth of the country’s workforce.

Iris will employ the investment from Leonard Green to expand its North American operations. This sector, constituting over a quarter of the company’s revenue, was reportedly experiencing rapid growth before the capital infusion. The specific value of Leonard Green’s investment and other financial terms, apart from the disclosed valuation at the deal’s closure, was not disclosed by Iris.