• Ciklum was founded in 2002 by the Dane Torben Mygaard. In 2006, he opened a subsidiary in Belarus called Ciklum Bel LLC (ТАА «Сіклум Бел»). A year later, it became one of the first residents of the Belarusian Hi-Tech Park, a special tax and legal regime for IT companies. As of 2019, Ciklum Bel LLC (ТАА «Сіклум Бел») employed 171 specialists.
• When the process of Ciklum Bel LLC liquidation will be completed, the Belarusian economy will lose not only a part of tax revenues, but also a large investor, George Soros. His Ukrainian Redevelopment Fund has owned a controlling stake in Ciklum since 2015.
• In Ukraine, Ciklum has development centers in Kyiv, Odesa, Vinnytsia, Dnipro, Kharkiv and Lviv. According to the ranking of the 50 largest IT companies in Ukraine by the number of specialists, as of July 2022, more than 3,000 specialists work at Ciklum.
• Ciklum is currently expanding the geography of its presence in Europe. The company has recently opened delivery hubs in Romania and Bulgaria.

• The delivery hub in Romania was built upon the Czech software developer CN Group Ciklum acquired last year. The company has long been present in Central Europe, including Romania.
• The new office has started operating under the Ciklum brand.
• Ciklum Romania is to benefit from the synergy of CN Group’s achievements and local expertise with Ciklum’s global aspirations and experience.
• The Ciklum team in Romania already unites several dozen professionals working on end-to-end development of innovative solutions for well-known brands in various industries. This year, the company plans to multiply the number of specialists in the Romanian center.

“After the acquisition of the Czech CN Group, which also cooperates with Romanian developers, establishing a new delivery hub under the Ciklum brand was only a matter of time for us. We know about the strong talent pool in Eastern and Central Europe – thousands of our colleagues work from Ukraine, Poland, the Czech Republic, and Slovakia. Now we can confidently add Romania to this list. We are sure that Ciklum’s experience in the global IT industry will open up many opportunities for local talent to grow professionally and refresh the local IT community,”

said Andriy Oksenyuk, CFO, Ciklum.

• A few months ago, Ciklum also opened a delivery hub in Sofia, Bulgaria, which already brings together more than 100 professionals.
• Ciklum is a global product engineering and digital services company headquartered in the UK. It has 4,000+ software developers, designers, product managers, and data scientists around the world.

“Eastern Europe talent is a key cornerstone in the global digital solutions and services market. We know that from our experience in Ukraine, Poland, Czechia, Slovakia and Romania. The IT industry in Bulgaria is growing at double digits – and I think our 20 years of experience in developing and nurturing talent in this field will support this dynamic,” said Kulraj Smagh, CEO of Ciklum.

• The new office has opened in Sofia, the capital of Bulgaria, and already employs more than a hundred professionals.
• The company plans to accelerate the hiring of local professionals. Also, it offer jobs to Ukrainians who have been forced to temporarily leave their homes and move to safer locations due to the full-scale war with Russia.
• The company expects its center in Bulgaria to hire several hundreds of tech professionals throughout the country.
• Last year, Ciklum acquired CN Group, a Czech-based software developer, and now continues to strengthen its position in the international market.

About Ciklum

• Ciklum is a product engineering and digital services company serving Fortune 500 and fast-growing organizations.
• Headquartered in the UK, Ciklum has 4,000+ software developers, designers, product managers, and data scientists across the globe who build tailored digital solutions that leverage emerging technologies.
• Ciklum has offices in six cities in Ukraine with over 1,500 developers.
• The company also has R&D centers in Poland, Romania, Spain, Israel, and Pakistan. It employs about 5,000 specialists around the world.

• The company’s new development center is located in Chennai, one of India’s largest technology centers. According to Ciklum representatives, this will be the beginning of further expansion in the region. The company plans to grow its team in India soon.
• The press release says that the opening of the office is part of Ciklum’s strategy to expand geographically and further scale its business. The new R&D center is the second in Asia, and the company also has an office in Pakistan.
• Entering the Indian market will allow the company to accelerate the search and hiring of professionals to meet the high market demand for digital transformation services. It will also improve communication with global clients in terms of time zones.

“The new development center in India serves as additional proof of our global vision for geography, technology, and business verticals. I look forward to the further development of our engineering teams in this region and the mutual exchange of expertise,” comments Andrii Dehtiarov, VP of Engineering at Ciklum.

• The company has 12 representative offices across the world, 6 of which are located in Ukraine.
• As it became known earlier, Ciklum has acquired the Czech software developer CN Group. The company needed this deal to gain a foothold in the markets of Central and Eastern Europe, as well as DACH countries.

The parties did not disclose the value of the deal. According to the estimate of Yevgen Sysoyev, managing partner of AVentres Capital, the amount of the transaction could be tens of millions of dollars.

“Genesis Capital has acquired CN Group from the founders as part of an MBO, a buyout of the company by its management. Over the past 2.5 years, Genesis Capital, together with the management team led by Michal Širica, has achieved outstanding growth and profitability. We are extremely proud of what CN Group has achieved with our investments and look forward to its continued success,” said Martin Willisch, partner at Genesis Capital, who was responsible for this project.

Genesis Capital sold 100% of its CN Group shares to Ciklum.

Ciklum needed the deal to gain a foothold in the markets of Central and Eastern Europe, as well as DACH countries (Germany, Austria, Switzerland).

CN Group’s headquarters is in Prague, and there are five more delivery centers located in Central Europe. The company provides software development, IT consulting, and mechanical design services. Its portfolio includes 62 international clients, including Procter & Gamble, Strabag, TF Bank, Bunte.de, and FlatexDEGIRO.

CN Group team has 360 professionals in the Czech Republic, Slovakia, and Romania. Now they will join Ciklum, which already employs more than 3,500 specialists.

Francisco D’Souza, co-founder of Recognize, and partners of the firm, Rajeev Mehta and Josh Miller, joined Ciklum’s board of directors.

About the companies

Today Ciklum employs 3,500+ professionals. The company has offices in Ukraine, Belarus, Spain, Poland, the UK, and Pakistan.

Recognize is a specialized technology investment platform founded by Francisco D’Souza, co-founder and former CEO of Cognizant, Charles Phillips, former CEO of Infor and former president of Oracle, and financier David Wasserman, a partner of Clayton, Dubilier & Rice. Recognize builds technology companies by partnering with talented management teams and providing industry insight, operational expertise, and strategic capital to spur innovation.

To recap, AIN.UA previously told in detail about the Ciklum’s ownership structure. It is not reported whose share decreased after the attraction of the new investor. The editorial team of AIN.UA requested details about the deal.

To recap, according to AIN.UA’s calculations, the valuation of Ciklum in 2019 was about $150 million. Check out the article to learn more about the history of investments in Ciklum.

The jury selected only companies that have already appeared in previous editions. Among the selection criteria there were: an innovative approach to work, certificates and awards for the successful implementation of projects, customer reviews and professional growth of employees. To get into the rating of the company had to send a corresponding application.

Compared to 2018, the number of Ukrainian firms and companies with Ukrainian offices decreased from 18 to 15. The 2019 rating included:

• EPAM;
• Ciklum;
• Luxoft;
• Intellias;
• Eleks;
• N-ix;
• Sigma Software;
• Softjourn;
• Softengi;
• Svitla;
• Infopulse;
• Miratech;
• Program-Ace;
• TEAM International;
• AMC Bridge.

It is noteworthy that the second outsourcer of Ukraine in terms of the number of employees, SoftServe, did not enter the first hundred. Itera and Artezio dropped out of the list.

A complete list of participants is available on the IAOP website.

Ciklum was founded in 2002 by the Danish businessman Torben Majgaard. Starting from the age of 15, Torben was involved in sales of computer components, selling 10,000 floppy disks a week, while working in the Obs! supermarket in Holstebro. At 23, he founded the Den Blå Butik network of computer equipment stores. And at the age of 26 he founded the Latvian company Vilcomp, which was engaged in the sale of used computer equipment to the countries of the Baltic region, Russia and Ukraine. In August 2001 Torben turned 31 and moved to Kyiv, and in January 2002 he founded Ciklum. By next August, the company already had 40 people.

After 8 years, in 2010, the company already had 1,000 people and revenues of $32.5 million. Ciklum is among the top 5 Ukrainian outsourcing companies, and the only one in the top with the prevailing outstaff employment model of developers, there are 70% of them in the company, as opposed to 30% at an outsourcing.

Deals

Until the end of 2010, an American entrepreneur, Michael Schneider, is buying 11% of the company. He also holds the position of COO Ciklum.

Already in May of 2011, Schneider leaves the company. And in April 2012, Torben sells a stake to the American fund Horizon Capital. The size of the share is not specified by the fund, however, according to the Cyprus registry, it was 23%.

A month before the deal, Schneider’s share was returned to Ciklum Holding Limited. At the same time, Lorimer Ventures (Cypriot legal entity Horizon Capital) transferred MAJGAARD LIMITED (beneficiary Ciklum Holding Limited) $1.5 million secured by 5% of Ciklum shares. The purpose of the transaction was not clarified by the AIN.UA editors, however, it probably could have been related to the purchase of Schneider’s share and the subsequent transaction.

Ciklum’s revenue for 2012 was $86.4 million. However, the deal, announced in April, with probably preparatory transactions in March, and, most likely, started in 2011. Revenue in 2011 was $62.5 million. With an average EBITDA of 15% for outsourcing and a multiplier of 5-7, as for a company that had grown one and a half to two times before that year, it could be about $10.7 million – $15 million for 23% of the company. The Ministry of Finance comes up with that amount as well (albeit with a larger corridor of $5 million). Their calculations are based on public data on the IPO competitor Ciklum, the EPAM company.

In November 2015, Horizon sells its stake to the Soros Fund. A new share of Torben has been added to the share of Horizon, which, according to the AIN.UA edition, may amount to another 22%. The commercial result of Ciklum for 2015 is unknown. However, the revenue of an outsourcing or outstaff company, unlike a product company, is simple to calculate. It grows in proportion to the growth in the number of employees and amounts to about $4,000 – $50,000 per person per year at outstaff and $50,000- $60,000 per person per year at an outsourcing. The ratio of the number of employees to Ciklum’s revenue over the past years confirms this. With 2,500 employees globally, Ciklum’s revenue for 2015 could have reached $120 million. According to Ciklum’s own report, revenue for 2014 with the same number of employees was $130 million. Let’s assume that it never fell and in 2015 at least repeated the result of 2014. With the same EBITDA and possibly no smaller multiplier (although the growth from 2012 to 2015 slowed down, reaching 39% for people, and probably disappeared in revenue), the transaction amount could be $43.8 million – $61.4 million for 45% of the company.

Horizon Capital at this calculation could make exit x2 compared to the entrance. The specific buyer in the transaction is the Ukrainian Redevelopment Fund LP., managed by Dragon Capital within the framework of the Dragon Capital New Ukraine Fund, invested by the Soros Fund. In addition, probably 45% of the buyer, according to AIN.UA edition, could get the right of veto and the right to dismiss CXO, including the CEO. M&A deal consultants were AVentures.

New Management

In August 2017, Ciklum announced a change of CEO. Michael Boustridge became the new CEO, and Robert Corace became the new director of sales and marketing. Previously, these two roles were performed by Torben Majgaard.

In February 2019, a month after the death of Torben, the company announced a new deal, the sale of shares of Dragon Capital and AVentures. The specific buyers were Dragon Capital-controlled funds of the Dragon Capital New Ukraine Fund L.P. on the money of the Soros Fund and Dragon Capital Investments Limited. With a staff of 3,500 people globally, Ciklum’s revenue in 2018 could reach $168 million. Dragon Capital and AVentures shares according to information from AIN.UA sources could be 10% and 1%, with the current calculation it was $13.8 million – $19.4 million for 11% of the company. The entire company may cost $150 million.

To find out the details of the sale of new shares, the AIN.UA editors contacted the alleged successors of Torben, but failed to get a public comment.

It is noteworthy that 9 months ago, in April 2018, Torben invested in the AVentures Capital fund a seven-digit amount, which, according to AIN.UA sources, could be about $1.5 million. The amount is comparable to the likely price for 1% in the last transaction. Such investments are usually made not in cash, but in commitments – a promise to participate in transactions for a declared amount. AIN.UA editors could not find out whether the fact of the conversion of Torben’s stake into an equivalent stake in Ciklum for AVentures in the framework of the transaction announced on February 4, 2019 took place. According to AVentures partner, Evgenia Sysoev, “This is absolutely wrong. This is a separate new investment.” According to one of the interlocutors of AIN.UA, in the current situation, this may be a plausible scenario for the implementation of the April Torben’s commitment.

What’s Next?

After the sale of Ciklum’s stake to the Soros Fund in 2015, the company started talking about an IPO. However, the growth of employees, which directly affects revenue, slowed down:

From the middle of 2014, the Ukrainian office of Ciklum did not actually grow. For comparison, SoftServe and EPAM have doubled in Ukraine over this period of time. Luxoft also almost did not grow in Ukraine during this period, however it added 5,000 employees in other locations. EPAM has grown from 11,000 to 22,000 employees in other locations. SoftServe has grown by 1,000 employees abroad. Ciklum has increased the same amount of employees abroad for this period.

Now the company seems to have taken a strategic direction to “gain weight” through M&A: “The company has the potential to grow even faster if it increases its M&A activity — buying smaller companies with expertise in a specific IT field,” says the managing partner of AVentures, Andriy Kolodyuk. – EPAM has completed 19 M&A in its history, Ciklum – not even one. In fact, Ciklum has already performed M&A: in 2009, it bought Mondo A/S with 150 employees in Denmark, Pakistan and Ukrainian Kharkiv. In 2013 it acquired 100% of the shares of the outsourcing company Kuadriga with an office in Kyiv. According to forecasts of AIN.UA sources, the next purchase of Ciklum could be the outsourcing company CoreValue, the company where AVentures invested earlier.

The article was prepared by: Ilya Boshnyakov, Ilya Kabachynskyi.

“We believe that ongoing global digital transformation will support increasing demand for IT solutions and services, and that Ciklum is very well positioned to capitalize on this sustainable trend. Founded in 2002 and headquartered in London, Ciklum has one of the largest footprints in Ukraine, great expertise and access to IT talent. We are enthusiastic about the opportunity to support one of the leading companies in the segment, which is run by great management and shareholders,” said Andriy Nosok, Managing Director for direct investment in Dragon Capital.

According to Michael Boustridge, Chief Executive Officer of Ciklum,  the attracted investments “will continue to propel Ciklum’s rapid growth in delivering cutting edge technologies to clients around the globe.”

According to Andrew Kolodyuk, AVentures Capital Managing Partner, he has known the company since day first when it was founded and has been a member of the Board of Directors since 2015. “This is a natural decision for AVentures to invest at this round and share our confidence and belief in management and company’s future, ” he said.

In April last year, the late founder of Ciklum, Torben Majgaard, invested in AVentures Capital, a Ukrainian venture capital fund. He also became a partner of the fund. Previously, AVentures Capital has already conducted joint investments with Torben, for example, in Augmented Pixels, an augmented reality company, in the Vox audio player from Coppertino.

Dragon Capital New Ukraine Fund L.P. is a private equity fund, established in November 2015. The fund is managed by Dragon Capital. Dragon Capital and a private investment fund managed by Soros Fund Management LLC became its anchor investors. The fund invests in various sectors of the Ukrainian economy.

Details are not specified.

Torben Majgaard is the founder of a large outsourcing company Ciklum. It has representation in several countries, including Ukraine. In Ukraine, Ciklum is one of the largest IT companies, it employs over 2,600 people. In addition, Majgaard acted as executive producer of the movie “Land of Mine” (Under sandet), which was nominated for an Oscar from Denmark in the category “Best Foreign Language Movie.”

The editorial staff of AIN.UA expresses its condolences to the family and friends of Torben Majgaard.

“Over 1,500 Specialists”Category

This year, Infopulse was recognized the best employer among the largest Ukrainian IT companies. SoftServe and GlobalLogic got into the top-three. Luxoft and NIX Solutions were not represented in this rating as they had not overcome the barrier of 10% votes of the total staff quantity.

“800-1,500 Specialists”Category

Genesis won in this category with minimum 95 scores in each question pool. The last-year winner Intellias took the second place, and SigmaSoftware – the third one.

“200-800 Specialists”Category

Govitall is the winner in this category. Trionika and Netpeak go behind. Terrasoft, the last-year silver medalist, did not overcome the barrier by minimum number of votes.

81-200 Specialists”Category

Codemotion wins the second consecutive year, and now in the “81-200 specialists” category. 52 interviewed employees gave maximum scores to the company. Ringostat, Technorely and ActiveBridge also got the highest scores and took the second, third and fourth place, respectively.

Food Companies

This year was the first time when DOU made the food companies rating. Ringostat took the first place, and M2E Pro and Terrasoft also got to the top-three.

In addition, the rating includes the employers breakdown by cities:

• The best employer in Kyiv — Codemotion
• Kharkiv — ITOMYCH STUDIO
• Lviv —  Leobit
• Dnipro — LANARS
• Odesa — Netpeak
• Vinnytsia — Pillar
• Cherkasy — Active Bridge