TPG bets on government digitization with Government Brands

As the general population continues to integrate technology more and more into their daily lives, there is a certain level of digital aptitude that they expect from their towns and cities, according to TPG's Millikin.

TPG Tech Adjacencies is taking a stake in Government Brands as the firm sees opportunity in digital transformation of government entities, Tim Millikin, partner at the firm, told PE Hub.

TPG on Thursday announced it has acquired a significant minority stake in Government Brands as part of the company’s recapitalization. With the recap, PSG has retained majority ownership, while minority investor Greater Sum Ventures fully exited its position in Government Brands.

As the general population continues to integrate technology more and more into their daily lives, there is a certain level of digital aptitude that they expect from their towns and cities, Millikin said.

“The pressures to digitally transform have only increased as a result of COVID-19, as local governments – like many other industries – had to adopt software in order to continue many of the normal course, mission-critical activities that would have otherwise taken place in person,” the investor said.

Government Brands, based in Alpharetta, Georgia, provides contactless Software-as-a-Service and payments solutions for all sizes of government entities, including municipalities, counties, states and federal agencies.

In May, sources told PE Hub that Government Brands generates $150 million in revenue and around $50 million in EBITDA.

TPG’s investment in Government Brands sits at the intersection of a handful of key thematic focus areas where the firm sees significant growth opportunities: the digital transformation of industries, payments, and vertical software, Millikin said.

“We believe that Government Brands is filling an important need as one of the only software platforms of scale that is purpose-built for government entities,” he said.

“The company has been successful in building a comprehensive software and payments offering that enables a seamless user experience for constituents while empowering governments of all sizes to better manage their inflows and optimize operations,” he added.

TPG is investing out of TPG Tech Adjacencies (TTAD), the firm’s investment vehicle focused on providing flexible capital solutions to the technology industry.

TPG’s other recent investments in the vertical software or payment space include EIS, a core and digital platform provider for insurers, and Zenoti, an enterprise cloud platform for the beauty, wellness, and fitness industries.

Correction: The new version of the story corrects the spelling of Tim Millikin’s last name.