Hg Capital Invests $42m-plus in Litera Microsystems, As K1 Sells

Hg, the Manager of HgCapital Trust plc, has today announced that HgCaptital Trust plans to invest $42m/£32.1m in Litera Microsystems, the provider of end-to-end document lifecycle solutions – as it purchases the company’s equity from K1 Investment Management which bought the legal tech company in 2016.

K1 said in a statement: ‘Litera made substantial investments to more than double its product portfolio and build a robust global go-to-market engine. Additionally, Litera pursued a bold add-on acquisition program, made possible by K1’s operational assistance, to seamlessly bring together four companies under one name.’

But, now it looks to have sought to sell on its investment to Hg and others.

Exact terms of the transaction are not disclosed. However, HgCapital Trust plc will invest approximately $42m/£32.1 million in Litera, with other institutional clients of Hg investing alongside the company through the Hg Genesis 8 Fund.

I.e. the total investment is likely much larger – but those involved don’t want to say what this is yet.

Based in London, Munich and New York, Hg is a specialist private equity investor focused on software and service businesses. Meanwhile, Litera has developed a suite of legal document productivity applications, delivered as an end-to-end platform to more than 1,300 organisations across the globe.

Avaneesh Marwaha, CEO of Litera, said: ‘Over the last few years, Litera has experienced great success in creating a platform for long term growth. As we looked for the next partner to align the business with, Hg stood out.’

‘Leveraging Hg’s support and their experience in software, legal, life sciences and global expansion will enable Litera to reach new levels of success with confidence, whilst also allowing us to further invest in our people and culture. We look forward to partnering with Hg and developing new products and capabilities to continue to meet the evolving needs of our customers,’ he added.

It’s not the largest ever investment in, or acquisition of, a legal tech company, but it’s one of the largest. For example, Kira Systems bagged $50m last year.

But, it shows that investor demand for a share of the legal tech market is only growing.

Hg were advised by Evercore (M&A), EY (Financial & Tax), Deloitte (Financing), PWC (Commercial) and Skadden (Legal). Litera were advised by William Blair.