GCP is preparing to launch the sale of its majority stake in digital transformation consultancy Hippo Digital later this year, three sources told Mergermarket.

The sponsor appointed KPMG as sellside financial advisor last year to assess exit options for the Leeds-based company, which provides a range of digital strategy, design and engineering services, the sources said.

GCP has begun initial conversations with potential bidders for the asset, two of the sources said. The sellers are expected to invite both private equity buyers and strategic parties, potentially including creative agencies, to participate in the process, one of them added.

Vendor due diligence is currently being completed, one source said. A formal process is expected to kick off in the summer, another added.

Hippo Digital is expected to be marketed off more than GBP 10m in annual EBITDA on the back of strong recent growth, the sources said.

The company generated more than GBP 8.1m in pre-tax profit off GBP 38.6m turnover in the year ended 31 March 2023, versus GBP 4.6m profit off GBP 24.5m turnover the previous year, according to public filings.

The rapid growth was in part due to Hippo Digital’s acquisition of local data consultancy The Data Shed in April 2023, per the filings.

GCP invested in Hippo Digital in March 2021. The company works with UK government departments and private sector clients to define business or policy problems, provide evidence-based solutions and designs, and engineer and deliver digital products and solutions, according to the sponsor’s website.

Hippo Digital also provides cyber security services and artificial intelligence software solutions, according to its website.

It has around 250 employees with additional offices in Manchester and Coventry, according to GCP’s website.

GCP, KPMG and Hippo Digital did not respond to requests for comment.