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Xempus hunts acquisition opportunities following Series D – CFO

Xempus, a German provider of a software-as-a-service (SaaS) platform for pensions and life insurance, is actively searching for acquisition opportunities as part of its core strategy, CFO Malte Dummel told Mergermarket

The Munich-based firm is looking to use the proceeds of its USD 70m Series D round, which it raised in March last year, to undertake acquisitions to strengthen its position in the European pension, life and healthcare markets, Dummel said. No timeline has been specified but that the firm is “actively” and “deliberately” looking to make an acquisition, he added. 

Targets include firms with strong technological competences in terms of application programming interfaces (APIs) that provide connectivity between insurance firms, agents and customers, Dummel said. These companies will be looking to scale, he said, adding that firms with advanced software verticals in the area of insurance and long-term savings are also of interest. 

Currently, there is no natural cap on target size, he said, noting that there are not many SaaS firms in Europe with around EUR 100m ARR in the insurance space. The sweet spot for Xempus would be firms with low-to-mid-double-digit ARRs, Dummel said.

There are also no particular geographical constraints for Xempus in Europe, but targets that operate in jurisdictions with similar healthcare and pension systems to Germany’s are of particular interest, the executive said.  

The SaaS pension and life insurance platform has a set of retained financial and legal advisors but there is no fixed roster of individuals Xempus is willing to work with. If there are individuals the firm is unfamiliar with but they have a good idea, they “will get the deal”, Dummel said. 

There is a “substantial” potential firepower available to Xempus due to the funding raised, with existing investors able to turn to large stocks of dry powder, Dummel said. Debt financing is not completely off the cards, however, he said the firm had “no need” for such measures yet. There is no need for additional funds or any pressure to implement an exit strategy, he added. 

Alongside executing an acquisition strategy, Xempus is looking to break even. The Series D has put the firm on a pathway to break even within the next 18 months or less, Dummel said.  

At present, Xempus is solidly producing ARRs in the double digits in terms of millions of euros, growing in the 30% to 100% range year over year, with forecasts for 2023 and 2024 expected to yield similar numbers, Dummel said. 

The last funding round was a Series D in March 2022, led by Goldman Sachs Asset Management, raising USD 70m. Existing investors HPE Growth and Cinco Capital participated in that particular round. Armada Partners acted as Xempus’ financial advisor, while Taylor Wessing took on the role of legal counsel, a report suggests

A Series C round was reportedly held in April 2020, raising EUR 25m and led by HPE Growth. Other participants include Armada Investment and Cinco Capital. Total funds raised to date have eclipsed USD 125m. 

Xempus sells more than 100,000 new insurance policies per year, which accounts for 2% of the German market Dummel said. The firm reportedly connects over 18,000 insurance agents, 60,000 corporates and life insurers. 

by Stephan Roth