Sage buys majority of Brazilian software group Sage Group has broadened its foothold in Brazil with the acquisition of a majority stake in Folhamatic Group, a provider of accounting software for small businesses. The UK's largest listed software group by market capitalisation on Wednesday said it had agreed to pay £125m for the 75 per cent stake, with the remainder of the Folhamatic's equity retained by Mauricio Frizzarin, the Brazilian group's founder and chief executive. Mr Frizzarin will stay on to run the business, which is one of the country's leading accountancy software companies and earns its cash through a subscription-based model. Although Sage already owns one minor business in Brazil, Wednesday's deal - which values Folhamatic's total equity and debt at £191m - is the FTSE 100 group's first significant move into the Latin American country. The valuation equates to three times Folhamatic's annual revenues last year and 13.4 times its earnings before interest, tax, depreciation and amortisation - a price that Julian Yates at Investec said was "very expensive." The acquisition was "strategically sensible for Sage, with Brazil being an attractive and relatively under-penetrated market," he added. Paul Harrison, Sage finance director, defended the lofty multiple paid for the Folhamatic stake. This is a high growth business in an exciting market. When you compare it with other technology businesses in that market, the price is reasonable. Sage said it was attracted to the Brazilian market because roughly 90 per cent of its small and medium-sized enterprises do not yet use business software. Brazil has complex tax regulations, which boosts the need for accounting software such as those provided by Sage. "Diversifying out of North America and western Europe is something that has value in the long term for us," Guy Berruyer, chief executive, said. Sage said the acquisition would be immediately earnings accretive and that it expected the Brazilian business to more than double its ebitda between 2011 and the end of 2012. The acquisition is part of a move by Sage to broaden its revenue base following criticism for being slow to get into internet-based software. Last week Sage appointed Donald Brydon, the City veteran who heads the board of Royal Mail, as its new non-executive chairman to take over from Tony Hobson on September 1. Shares in Sage rose 3 per cent to 261.4p.