The Foundry is a leading global developer of computer graphics, high-end visual effects (“VFX”) and 3D design software for the design, visualisation and entertainment industries. The company was founded in 1996 and is headquartered in London, with offices in Manchester, Los Angeles and SiliconValley alongside representatives in Canada, China, France, Germany, Hong Kong, Japan, Korea, Mexico, Serbia, Singapore, Slovakia and Taiwan. It has more than 2,000 customers in over 100 countries and employs c. 270 people.
The firm has set the de facto standard in the film postproduction VFX space with its NUKE product. In 2012, the company acquired MODO, a 3D modelling product that gained the company access to the gaming and design segments. Since the acquisition, the Foundry has grown MODO significantly through funded development projects in the design sector.
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HgCapital has known the company for several years and this investment is in line with HgCapital’s proven sector-focused approach of investing in leading global providers of vertical market application software. The Foundry shares many of the characteristics that HgCapital looks for, providing an excellent platform for growth across a diversified client base and a commitment to innovation.
The Foundry is rich in intellectual property and positioned well against favourable segment trends that could allow for an upside return to be achieved through a number of new business initiatives. We see potential from continuing to leverage world-class products in new segments.
How do we intend to create value?
HgCapital will work closely with the management team to help the business accelerate its high rate of organic growth, in particular the ongoing development of disruptive technologies driving creative control and production efficiency. HgCapital will also work with The Foundry with the aim of identifying value accretive M&A to support the business and its management in building a global software champion.
How will we crystallise value?
We believe The Foundry will be an attractive acquisition target to both trade and financial buyers, given its robust organic revenue growth, high EBITDA margins and large market share.