CIPHR

Private Equity Manager (GP)

Case study

About the company

CIPHR is a UK-based provider of cloud/Software-as-a-service human capital management (“HCM”) and payroll solutions to mainly mid-market businesses. The company offers a suite of proprietary software and software from its partner network (known as ‘CIPHR Connect’), serving mainly UK customers, with several of its customers using its software in multiple geographies. CIPHR’s partner network allows greater module customisation for specific customer types.

Investment Rationale

• An attractive business model with demand driven by heightened regulation; CIPHR’s core UK HCM software market is expected to grow quickly in the next few years.
• The company operates a subscription model with a majority of recurring revenues and limited customer churn.
• CIPHR operates joint selling arrangements with partners who offer a captive pool of potential M&A targets in a fragmented market.
• ECI expects interest from a wide range of private equity and trade buyers at exit.

Our relationship

PIP is a primary investor in four ECI Partners (“ECI”) funds and Pantheon holds an advisory board seat on each fund.

Active management and value creation

• ECI was the preferred bidder for CIPHR, which the private equity manager highlights as evidence of its good relationship with the founding CEO and wider management team.
• Expansion through M&A is a core value creation strategy for ECI.