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Birch Hill Equity Partners has reached a deal to take a controlling stake in Toronto software company Sigma Systems.
The parties have not disclosed the amount of the investment but Birch Hill will become the majority investor in the company, which makes software that runs complex customer service and ordering platforms for the telecom industry.
Sigma's management team, including co-founder and CEO Tim Spencer, will continue to run the company and also retain minority stakes.
This is not the first time Sigma Systems has changed hands: Its three founders – Mr. Spencer, Andy Jasuja and Vasu Chanchlani (who passed away last year) – sold the company for $62-million (U.S.) in 2002 to San Carlos, Calif.-based Liberate Technologies. Liberate soon ran into financial difficulty and by the end of 2003 it sold the Canadian division back to Sigma's original owners at a fraction of the price, shortly before filing for bankruptcy protection. Liberate recorded a gain of $9-million on the sale.
This time, the owners went with Canadian investors, although Mr. Spencer said there was interest from south of the border again.
"It's nice to keep this type of partnership here in Canada," he said in an interview. "Birch Hill has had a lot of success in taking great technology companies from Canada and helping them grow on the international stage."
Sigma works with a number of Canadian telecom clients, including Rogers Communications Inc. and Telus Corp., but also does significant business outside of Canada, with customers in 40 countries.
About 75 of its 360 employees are in Europe, due in large part to its 2013 acquisition of London, U.K.-based enterprise product management software firm Tribold. Sigma has made three other acquisitions in recent years, two primarily for the companies' intellectual property.
Mr. Spencer said the company will use the investment to grow its international sales teams, expand into other industries with similarly complex ordering demands, such as insurance and financial services, and pursue further acquisitions.
Michael Mazan, a partner with Birch Hill, said the Toronto private equity firm has a preference for companies with management teams and headquarters in Canada even if they have international operations beyond that, and saw a good fit with Sigma's management team and growth prospects.
Some of the firm's portfolio of about 18 investments include Shred-It International Inc. and Sleep Country Canada, both of which have recently been reported to be considering initial public offerings.
Birch Hill also has a track record of investing in Canadian tech companies, including Constellation Software Inc., Q9 Networks Inc. and Atria Networks, the latter of which it sold to Rogers Communications Inc. in 2010 for $425-million (Canadian).
As for the firm's plans for Sigma, Mr. Mazan said an IPO – the route Constellation took in 2006 – is "absolutely a possibility."
"There's also a possible sale to other parties – whether strategic or financial – down the road," he said, adding that the focus for now is on growing the company. "We're longer-term investors. Our average hold period is over six years."