ID verification group in £547m swoop for US target

GB Group, the Chester-based identification verification specialist, has agreed to acquire US company Acuant for £547m, bringing together two of the leaders in the global digital identity market, with combined revenue of circa £265m.

The business said the combination creates a global leader in identity verification and identity fraud prevention, materially increases GBG’s US presence and primes the enlarged group for accelerated global expansion.

The complementary customer base provides the enlarged group with significant cross-selling opportunities and customer vertical diversification, while accelerating GBG’s data, product and platform strategy by approximately two years.

It is highly additive in terms of scarce, high quality talent with combination underpinned by long-standing commercial relationship, shared vision and culture and is entirely consistent with GBG’s long term strategy for global growth

Acuant is a fast growing, profitable and cash generative business which is strategically aligned with GBG and is expected to enhance the enlarged the group’s revenue growth while maintaining its robust margin profile.

For the 12 months ended September 30, 2021, Acuant generated $58.1m in revenue, an increase of 22% on the year to September 30, 2020, with the business continuing to trade strongly on a like-for-like basis since September.

Over the medium term Acuant is expected to grow annual revenue at about 25% driven by its higher rate of growth in subscription revenue.

With synergies the acquisition is expected to deliver incremental operating profit of approximately £5m in the financial year ending March 31, 2023.

The acquisition is expected to be earnings neutral in FY23, post-synergies, Acuant’s first full year under GBG ownership, and to be accretive thereafter.

GB will finance the deal through a cash box placing of new ordinary shares to institutional investors which has raised aggregate gross proceeds of £300m, as well as £5m in a retail offer, and the balance from a combination of approximately £155m partial drawdown against a new £175m revolving credit facility and existing cash on the balance sheet. The drawdown is equally split across HSBC UK, Silicon Valley Bank, Lloyds Banking Group, Citibank and the Bank of Ireland.

Acuant management and Acuant’s private equity majority owner, Audax Private Equity, are rolling approximately 28% and approximately 19% of their respective holdings in Acuant into the combined group.

Completion is expected to occur on or around November 29, 2021.

Chris Clark, GBG’s CEO, said: “We are delighted to announce the acquisition of Acuant. This is a business that we have worked with – and admired – for many years. The combination of our two businesses is a complementary and powerful one.

“Together, we are creating a global leader in identity verification as well as strengthening our capability to capitalise on the adjacent, emerging and fast growing identify fraud market.

“The US is the largest and most strategic market for location, identity and fraud services. The combination of GBG and Acuant accelerates our share in this market, increasing scale, customer base and introducing us to new and exciting sectors.

“As importantly, it also strengthens the breadth of our technology portfolio which we can use to support our current customers in new ways in growth geographies such as APAC and Europe, where we already have a strong footprint.”

He added: “The team at Acuant bring new skills and talent to GBG, an aligned culture and a shared vision to enable trust in the digital economy.

“We look forward to welcoming these new colleagues to the GBG family and are excited about the potential of the combined businesses and the acceleration this gives to our growth and strategic goals.”

Yossi Zekri, Acuant’s president and CEO, said: “This is an exciting day for Acuant. We are very proud of everything that Acuant has achieved to date – building a world class technology portfolio and a strong market position in the US across multiple sectors.

“There is still significant opportunity ahead and we feel that being part of GBG is the best way for us to capitalise on those opportunities.”

He added: “Our customer, technology and geographical mix is highly complementary and culturally we are aligned both in how we invest in our people and look after our customers. We are very much looking forward to working together in the years ahead.”

GB Group was advised by Giles Chesher, Louise Barber, Chris Blair and Claire Shepherd from Squire Patton Boggs.

KPMG advised GB Group on financial and taxation buy side due diligence and provided debt advisory support.

Mark Rowan, relationship director at HSBC UK, said: “As a British business furthering its international expansion, backing this acquisition was a fantastic opportunity for HSBC UK.”