EQT and CPP Investments Set to Acquire NEOGOV for Public Sector Efficiency

Acquisition of NEOGOV by EQT and CPP Investments

In a significant move aimed at bolstering the efficiency of public sector operations, the EQT X fund and the Canada Pension Plan Investment Board (CPP Investments) have reached an agreement to acquire NEOGOV, a prominent provider of human resources and compliance software specifically designed for U.S. public sector agencies. This strategic acquisition is set to enhance the software solutions utilized by over 10,000 public organizations across North America, as NEOGOV has established itself as a trusted partner in government HR solutions.

Founded in 2000 and based in El Segundo, California, NEOGOV specializes in cloud-native applications that support the entire employee lifecycle. Its comprehensive suite includes tools for recruitment, onboarding, performance management, and compliance oversight, all tailored to help public sector agencies navigate local policies and regulatory requirements efficiently.

Shane Evangelist, the CEO of NEOGOV, expressed enthusiasm about the partnership, emphasizing the shared mission between his organization and the investors. He stated, "Our goal is to assist local governments in operating more efficiently and serving their constituents effectively. With the support from EQT and CPP Investments, we can scale our operations faster and drive further innovation in product development."

The growth strategy outlined by NEOGOV focuses on enhancing product innovation and integrating advanced AI capabilities, which are critical for public sector agencies striving for increased operational efficiency and compliance. The partnership with EQT and CPP Investments is anticipated to be instrumental in overcoming challenges faced by public sector bodies, thanks to the vast experience that these investors possess in the software industry.

EQT's co-head of Global Technology, Arvindh Kumar, praised the caliber of NEOGOV’s management team, noting their profound understanding of the unique challenges that public sector agencies confront. He highlighted the significant trust NEOGOV has cultivated over the years within the public sector, indicating that this trust forms a solid foundation for future growth.

The announcement has generated excitement among stakeholders, as Tyler Parker, Managing Director at EQT Private Equity, remarked, "It’s uncommon to encounter a software company that commands such loyalty from its customers. We are eager to play a role in modernizing public sector operations and providing impactful technology solutions to those committed to civic service."

NEOGOV's successful track record and its offerings position it for further growth, especially in light of the increasing demand from public sector clients across North America. CPP Investments' Managing Director and Head of Direct Private Equity, Sam Blaichman, underscored the alignment between NEOGOV's capabilities and the investment firm's strategy, underscoring the company’s fit as a high-quality software investment.

As the acquisition progresses, it is expected that EQT X will be about 60-65 percent invested, including previous closed investments and scheduled public offerings. The transaction is pending customary closing conditions and regulatory approvals, which are likely to finalize in the upcoming months. Financial advisory services were provided by Moelis & Company for NEOGOV and Jefferies LLC for EQT, with legal counsel from Willkie Farr & Gallagher and Ropes & Gray respectively.

With NEOGOV poised to enter this new phase, the collaboration with EQT and CPP Investments is anticipated to accelerate growth, fostering a future where public sector agencies operate with greater efficiency and effectiveness through innovative software solutions. This acquisition will not only deepen NEOGOV’s market presence but also enrich the overall ecosystem of public administration software, ultimately benefiting the public sector and the communities it serves.