Apax Global Alpha to invest €36m in Zellis Group to strengthen position in HR and payroll software market

Apax Global Alpha (“AGA”), the reputable closed-ended investment company that facilitates access to Apax Private Equity Funds, has disclosed plans to invest approximately €36 million in Zellis Group. This investment, calculated on a look-through basis, aligns with AGA’s strategy of expanding its influence within the software industry, particularly in the HR and payroll sectors.

On April 15, 2024, the Apax XI Fund, wherein AGA holds a stake as a limited partner, finalized an agreement to acquire Zellis Group. Zellis is a prominent provider of payroll and HR software solutions in the UK and Ireland, and is expanding its reach into the global benefits administration software market. The completion of this acquisition is subject to standard closing conditions.

Zellis Group operates in a market experiencing structural growth and boasts solid core business fundamentals, including high recurring revenue and strong customer retention. The company’s primary operations, Zellis and Moorepay, are leaders in providing HR and payroll technology solutions across the UK and Ireland. Notably, Zellis serves about one-third of the FTSE 100 companies. Headquartered in Bristol, Zellis also has operations in India, the Philippines, and Ireland, underscoring its international presence and capability.

Apax Partners, with its extensive experience in the software and HR software sectors, sees Zellis as a valuable acquisition opportunity. Previously, Apax Funds invested successfully in Paycor, a similar business within the HR software market. The investment strategy for Zellis includes scaling the business and increasing market share not only in its current regions but also globally. Key growth areas identified include enhancing its position in the payroll sector and expanding into mid- and upper-mid market segments. Additionally, there are plans to acquire additional HR modules to offer more comprehensive services to existing customers and to expand the benefits administration business.

The investment value and AGA’s stake in Zellis Group are based on the look-through share of Apax XI’s overall investment in the group, reflecting the latest exchange rates, notably a EUR/USD rate of 1.0619 as of April 16, 2024. AGA’s involvement in Apax XI includes significant commitments amounting to approximately $700 million, strategically divided between USD and Euro tranches.

AGA’s shares, listed on the London Stock Exchange, provide investors with diversified exposure to private equity opportunities and a focused portfolio of debt investments managed by Apax.

Its strategic investment in Zellis Group signifies a robust confidence in the growth potential of the HR and payroll software sector. This move not only strengthens AGA’s portfolio but also positions Zellis to capitalize on expanding market opportunities, both in its core operations and new business areas. The investment is poised to enhance Zellis’s offerings, foster innovation, and drive significant market expansion.