Phoenix deal gives Tacit wings

By MICHAEL FOREMAN

Financial software company Tacit Group has secured backing of US$10.3 million ($23.05 million) from a United States investor in a transaction which values the Takapuna firm at $69 million.

Tacit chief executive officer Jan Hilder said Connecticut-based financial management group the Phoenix Companies had bought a third interest in the company in a deal signed in London last week.

Hilder and her husband, Murray, who founded Tacit in 1986 as an actuarial consultancy operating from a spare room at their home, have become paper multimillionaires overnight, but Hilder said all the money would be reinvested in the company.

The share issue has left the couple with a shareholding of 27 per cent between them, now worth $18.6 million.

"It puts the company at a significant value but that's on paper," said Hilder.

"We don't personally get any money out of this. It's sad but that's the way it is."

Tacit diversified into developing software for banks and insurance companies in 1997 when it launched its Talisman software suite, which included modules for life insurance and unit trust and loan administration.

The package sold well overseas, with export sales accounting for about 70 per cent of Tacit's $20 million annual turnover.

Tacit has more than doubled in size from 100 to 220 employees in the past three years and has opened offices in Sydney, Melbourne, Hong Kong and Manchester.

The company recently delivered a life insurance system worth $5 million to MGM Assurance in the UK and another worth $1.4 million to a Hong Kong institution.

Hilder said the US investment would finance further expansion in the United Kingdom and Asia.



Tacit will hire around 15 extra staff in Auckland and 10 in Australia for further research and development as a result of the capital injection, Hilder said.

"Auckland will continue to be the place where our base development takes place. For once we can capitalise on our currency differences in the other direction - it's a typical exporter's advantage."

Hilder said Phoenix had originally shown an interest in buying Tacit's software for use in emerging markets such as Turkey, but the investment discussions had taken precedence.

"They still are a potential customer and our business strategies are very much aligned," she said.

Peter Allport, director of New Zealand-based technology investment fund No 8 Ventures, which invested $3 million in Tacit up to 1999, said he wholeheartedly supported the Phoenix investment.

No 8 Ventures has been left with 9 per cent of Tacit, a holding now worth $6.21 million.

"Tacit was the first investment that No 8 Ventures made," he said.

"We hope that nine investments we have made since make similar progress."

Hilder said other shareholders included Australia-based investment company Bon Jour (formerly known as Odin Investments), which owned 11 per cent, and a number of smaller staff and family investors.