Workhuman, which runs employee recognition schemes for multinationals such as Cisco, Procter & Gamble and LinkedIn, is on course for a $1.2bn (€1.07bn) valuation after selling an equity stake to a UK institutional buyer.
It is understood that the Dublin-headquartered company, which was formerly known as Globoforce, hired the US investment bank Morgan Stanley to place a 10% stake in the company.
The shares are being sold by members of the Workhuman senior management and early backers of the company, which was founded in Dublin in 1999.
Following a tender process, it is understood that Intermediate Capital Group (ICG), a London investment manager, has agreed to purchase the equity and letters of offer have been sent to shareholders.
ICG previously backed venture capitalist Barry Maloney in his purchase of a 41.5% stake in Workhuman previously held by Balderton Capital. Maloney is a former general partner of Balderton, and introduced the venture capital firm to the business in 2002. It is understood that ICG provided debt funding to Maloney to help purchase the Balderton stake.
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The $1bn-plus valuation reflects the astonishing progress made by the company and its chief executive and co-founder Eric Mosley in recent years. According to accounts, Workhuman posted revenues of $452m in 2018, an increase of 32% on the previous year, while pre-tax profits more than trebled from $9.9m to $32.2m. It was reported last year the business was projecting revenues of $700m for 2019.
In the past few years, the company also made a series of distributions to shareholders, including a total of $112m in dividends between December 2017 and June last year, and a $45m capital distribution in 2017.
Aside from Maloney’s stake, the American entity Atlas Ventures holds a 31.4% share while Mosley owns 10.8%. The remainder of the equity is held by current and former management and investors who backed the company in a so-called friends and family round.
It is understood that the latest share placement was designed to facilitate management to sell down a portion of their equity and to provide a liquidity event for the long-term backers.
Friends and family investors include a number of former executives at stockbroker Davy, who first backed the company in a £199,000 (€220,000) funding round in 1999. Mosley joined the business at this time as a 28-year-old. The company was then known as Globogift and sold department store gift vouchers.
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According to its accounts, Workhuman sells cloud-based “social recognition software” used by large corporations to engage with employees across the world.
It provides reward programmes on behalf of more than 300 companies that employ over four million staff in 150 countries. It also provides data analytics software that measure the effectiveness of employee recognition programmes.
As Globoforce, it planned to float on Nasdaq in 2014, but opted not to proceed, despite filing documents. It employs over 600 staff, half of them in Dublin.