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HgCapital adds e-conomic to its software portfolio

27th Aug 2013
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European private equity house HgCapital - the owner of IRIS - this month acquired the Danish cloud accounting specialist e-conomic for an undisclosed sum.

One of the pioneers of web-based accounting, e-conomic was founded in 2001 and claims to be Europe’s leading supplier software as a service (SaaS) accounting company with around 60,000 customers for its core product. Another 100,000 use its “freemium” Debitoor invoicing and expenses product - but mainly in other markets than the UK.

The company’s founders Anders Bjornsbo and Jacob Wandt will bow out of the picture with Hg’s acquisition, but current chief executive Torben Frigaard Rasmussen will remain in place and looked forward to opening a few more doors with extra investment behind him.

HgCapital chief executive officer  Nic Humphries explained that his firm focused in particular on mid-market European software companies and some of the funds to pay for e-conomic may well have come from the £110m Hg realised when it sold a portion of IRIS, Computer Software Holdings, to Advanced Computer Solutions in March this year.

Humphries commented on the latest deal, “We believe e-conomic has the potential to be a true champion in this sector globally and will work closely with e-conomic to deliver this potential.”

In the UK, however, e-conomic faces competition from mid-range vendors such as NetSuite, and now Sage, plus Xero, KashFlow and FreeAgent Central at the lower end.

The Hg acquisition raises questions about FreeAgent, which has had a marketing partnership and 10% investment deal with IRIS for the past three years that has seen it gain significant user numbers through accountancy firms offering the system as IRIS OpenBooks.

IRIS Software Group CEO Phill Robinson said he knew e-conomic’s CEO Torben Frigaard Rasmussen and looked forward to sharing notes with him as a fellow member of the Hg software portfolio, but said there were no concrete plans in place yet for direct collaboration.

“I wouldn’t rule it out,” Robinson told AccountingWEB. “FreeAgent is targeted at micro SMEs so there’s a portion of the market it doesn’t reach.”

Richard Messik, a cloud accounting pioneer who has worked as a consultant with e-conomic for several years, commented: “I’m not privy to their plans, but I’d be very surprised if e-conomic don’t make a push into the UK. I think the Scandinavian market is pretty well saturated. They’ve gone as far as they can go there, so they will be looking for growth in other markets. I’m sure it can only be good news [for UK users].”


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