NORTH East software giant Sage has secured almost £200m from global investors in a fundraising exercise with the help of financiers from the Royal Bank of Scotland.
The company, which employs 1,200 people at its Great North Park headquarters in Newcastle, raised the unsecured financing over five, six, and seven-year maturities from traditional private placement investors around the globe.
It is believed to be the first software sector company for a number of years to effect a private placement, which is a method of raising longer-term debt capital by way of loan notes to institutional investors based both in the US and Europe.
Sage says it decided to approach the private placement market to refinance some of its existing debt. This form of debt usually comes at a higher interest rate than bank debt.
The successful placement followed an investor roadshow in London and across the US, which it says helped them communicate its heritage and future strategy to potential investors.
Investor appetite for the Sage credit was significantly in excess of both the initial funding requirement and the final size of financing, demonstrating how well the roadshow was received, say RBS.
Paul Harrison, Sage’s group finance director, said: “We were pleased with the response from US private placement investors, with the good demand for Sage’s debt reflecting the international standing of Sage and, in particular, our strong cash flows and high levels of recurring revenue.
“The notes provide additional flexibility, extended maturities and diversify our sources of funding. In completing this transaction, Sage was supported by a highly experienced advisory team from RBS on both sides of the Atlantic.”
For RBS, the transaction represents the culmination of a long period of marketing and co-ordination, with the relationship banking team in Newcastle drafting in expertise from colleagues in the bank’s private placement, loan markets and corporate risk solutions teams.
John Dryden, relationship director, RBS Corporate & Institutional Banking in Newcastle, said: “This is a great example of the breadth and depth of support we are able to offer our corporate clients beyond what might be considered traditional relationship banking.
“We have enjoyed an excellent relationship for a number of years with Sage Group and we were delighted to be able to work with our colleagues in London to help the company raise the finance necessary on this occasion.”
Sage planned on using some of that debt facility to make a £41m bid for a Polish software firm Teta. However, it pulled the plug on this deal earlier this week after it was outbid by a third party.
(Source: Journal July 7 2010)
