Private equity firm Leonard Green & Partners has made an investment in Iris Software Group Ltd. at a valuation of £3.15 billion, or about $4 billion.

The London-based business software maker announced the deal on Saturday. It stated that Leonard Green is taking a co-controlling stake alongside existing investor Hg. According to Iris, the transaction represents “one of Europe’s largest software buyouts for 2023.”

Bloomberg reported earlier this month that KKR had also expressed interest in acquiring Iris. As of Dec. 12, the private equity firm was reportedly in advanced talks for a deal at a valuation exceeding £3 billion. It appears that Leonard Green eventually made a more competitive offer. 

That Iris apparently drew offers from multiple prospective buyers may have boosted its valuation during the sale negotiations. The £3.15 billion at which the Leonard Green deal values the software maker is more than double the £1.3 billion it was worth in May 2018. That month, the software maker sold a stake to London-based investment firm ICG, which will remain a shareholder following last week’s investment.

Another factor that may have contributed to the jump in Iris’ valuation since 2018 is its steady growth. On occasion of last week’s investment, the software maker disclosed that its revenue has been climbing by a compound annual growth rate of 20%. It claims to be increasing earnings before interest, taxes, depreciation, and amortization at a similar clip.

Iris sells applications that organizations use to perform accounting, payroll and human resource management tasks. The company also competes in a number of other markets. Its portfolio includes, among other offerings, a parent engagement app used by about 12,000 U.K. schools and academies.

It offers both cloud-based and on-premises applications in each of the major market segments where it competes. Some of the company’s products, such as its IRIS Financials accounting platform, have also received machine learning features in recent years. Those capabilities are designed to automate common manual tasks for finance teams. 

Overall, Iris claims that its applications have been adopted by more than 100,000 organizations worldwide. The company maintains a particularly strong presence in the U.K.: Its payroll software supports one-sixth of the country’s workforce.

Iris will use the investment from Leonard Green to grow its North American business. The business, which currently accounts for more than a quarter of the company’s revenue, was said to be growing “rapidly” prior to the capital infusion. Iris didn’t disclose the value of Leonard Green’s investment or other financial terms besides the valuation at which the deal closed. 

Image: Iris Software