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NGA HR’s New Capital Structure Strengthens Ability to Achieve Growth Plans

Last week, Northgate Information Solutions, the holding company of NGA HR, announced that it has reached agreement with its shareholders and lenders regarding a new capital structure to reduce its debt and enable a faster path to growth. The new structure includes full debt-for-equity swap of the subordinated debt, and full pay down of existing senior debt (using the proceeds from the Northgate Public Services sale in December 2014 combined with £320m of new senior debt underwritten by the Investment Banking Division of Goldman Sachs and The Royal Bank of Scotland).

As a result, the merchant banking division of Goldman Sachs and funds advised by Park Square Capital will become the primary shareholders, owning 95% of the business. Until the transaction is approved (expected in early Q1 2016), KKR will keep 100% ownership and then retain 5%.

Adel Al-Saleh, NGA HR and Northgate Information Solutions CEO, confirmed that over the past four years, the company has been “on a journey to streamline our portfolio, which included selling the Northgate Managed Services and Northgate Public Services businesses, and building strong foundations to grow NGA Human Resources.”

An area of growth announced in June 2014 is enhanced multi-country payroll capabilities via its Payroll Exchange, which connects cloud-based HRMSs including Workday, SuccessFactors, SAP, euHReka, Oracle, and PeopleSoft with NGA’s managed or comprehensive payroll services – which can be provided in 145 countries. Around fifteen clients supporting ~250,000 employees are being scheduled for deployment with these technologies between H1 2015 and H2 2019, and several more clients are in the pipeline. New client industries now using Payroll Exchange include pharma, transportation, food and beverage, financial services, and consumer services.

NGA HR’s strategic priorities in support of growth include:

  • Delivery:
    • Build scale via its seven global delivery centers and ~30 local delivery centers
    • Provide consistency in delivery across all centers, as well as increased automation and quality including usage of Lean Six Sigma and Robotics.​
  • Technology platforms & offerings: Process improvement of platforms and service offerings including Payroll Exchange, Service Center Tools, and increased localization
  • Strengthening partnerships:
    • Certified Payroll connectors with Workday & SuccessFactors, integrated into Payroll Exchange
    • BPaaS: BPO service wrappers around Workday & SuccessFactors
    • Expand network of local payroll partners for selected geographies.
  • Target areas for growth & expansion:
    • Enhance mid-market capabilities and growth in select markets, including the U.S., U.K., Western Europe, Australia and New Zealand
    • Seek growth in new markets.

NelsonHall believes the outlook for growth at NGA HR is very positive, as it has been making the right investments to quickly deploy and integrate HR solutions in the cloud (including HR Cloud Accelerators, announced Q4 2015). Plus, NGA HR has been enhancing its multi-country payroll capabilities via the Payroll Exchange, and is one of only a few companies that can deliver payroll and HR globally, via on-premise and cloud technology service and/or BPO and BPaaS payroll & HR outsourcing focused on workforce administration.

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