NEWCASTLE workforce software company Pegasus has been acquired by US-based firm Avetta for what industry sources believe is around $160 million.
Pegasus CEO Adam Boyle declined to confirm the figure but described the deal as an "ideal end result" after the Newcastle West company - originally a mining labour hire firm - began laying the strategy for it five years ago.
"It is definitely encouraging for local companies, it's starting to close the gap between Silicon Valley and the US who are considered the top end of technology in the world, and where we are," Mr Boyle said of the acquisition, which came after a lengthy courtship between the two software companies.
Pegasus' capital raise of $28 million from Silicon Valley tech investment firm Accel-KKR (AKKR) in January last year allowed it to spread its wings globally. An industry source told the Newcastle Herald that, based on figures relating to the AKKR investment, the Avetta sale was likely to be around the $160 million mark and possibly as high as $170 million.
Mr Boyle said the AKKR investment had given Pegasus "a tonne of credibility": "They had done their due diligence and there was a level of acceptance of that, it makes things go quicker."
Specialising in competency and safety management software, Pegasus is now the base of operations in Australia for Avetta, one of the big three global specialists in supply chain risk management software.
Pegasus provides software and services for 3.5 millionworkers at some of Australia's largest companies, helping them to pre-qualify workers and manage site access and assets across industries including construction, transport and retail. Avetta's software focuses on on the risk management of suppliers and contracting companies.
"Avetta concentrates on suppliers and contracting companies and we focus on their workers. It's a great fit because ideally they are connecting to the same client for the purpose of workforce readiness" Mr Boyle said.
Mr Boyle said that Australia was a leader in worker compliance software, a market that Avetta was aggressively trying to tap in a bid to diversify its revenue.
Founded in 1989, Pegasus was originally a labour hire and safety training company for Hunter Valley mines.
"We were putting truck drivers on mine sites and that was the core business for a long time, it was what we were known for," Mr Boyle told the Newcastle Herald in 2020.
"When I became involved, shareholders saw the need to build a more sustainable business, because labour hire was very competitive.
"We decided to invest in the software space and built on the idea of a worker competency program. We thought if we could connect most of the mine sites in the Hunter and make it easier for contract workers to get to work and work safely, that would be the initial focus."
Pegasus soon developed software to manage worker inductions then pivoted to become a software-as-service (SaaS) company. Its products are used by more than 100 clients including Woolworths, Visy, and Lendlease to manage 3.5 million managed workers employed by 70,000 contractors.
The Pegasus purchase will accelerate Avetta's global growth strategy and is expected to create the largest global provider of third-party and employee risk management and compliance solutions. The Avetta deal comes a few months after Pegasus acquired New Zealand management and workplace consultancy company ISkills.
The company, which will retain its brand for now, employs 140 staff across Australia and New Zealand and has operations in Germany, England and Scotland.
Pegasus has had 25% growth year-on-year since 2013 and is on track for 40% this year.
The deal with Avetta, he continued, would allow it to continue plans to "bring the hard work the Pegasus team have done in Australia", to companies, contractors and workers worldwide. He said COVID-19 had highlighted the risks organisations face in the supply chain and with on-site contractors. It was vital corporations ensured essential workers had sufficient training and accreditation to perform their jobs without injury.
"All our clients kept working through the pandemic, from coal mines to retail. One [retail] client called us on the first day of COVID and said 'We need to employ 30,000', so there was a need for our product, though some new opportunities were put on pause," he said.
Mr Boyles said Pegasus had a "well-defined road map" of developing new technologies, including projects with the University of Newcastle, where he studied computer science: "I started as a software developer but not a very good one. I was more interested in product and growth strategies."
