Private equity interest in the software sector has boomed in recent years. Two firms that were ahead of the curve? Warburg Pincus and Francisco Partners. Now, the two longtime tech investors appear to have found their next deals.

Warburg Pincus has acquired a roughly 35% stake in Avaloq, a Swiss provider of fintech and banking services, in an investment that values the company at more than $1 billion. In a separate development, Francisco Partners is looking to sell portfolio company Plex Systems in a deal that would value the industrial software supplier at more than $1 billion, according to Reuters; the company could also reportedly pursue an IPO if no deal materializes. Francisco Partners has backed Plex Systems since 2012.Plex Systems in a deal that would value the industrial software supplier at more than $1 billion, according to Reuters; the company could also reportedly pursue an IPO if no deal materializes. Francisco Partners has backed Plex Systems since 2012.

Since the start of 2010, about 28% of Warburg Pincus’s new investments have taken place in either the financial services or IT sectors, according to the PitchBook Platform. Its major recent targets in the space include Avalara, a provider of tax software, and United Internet, a German provider of information management services.

Over the same span, Francisco Partners has been much more focused on tech. Nearly 54% of the firm’s deals since the start of 2010 have occurred in the IT sector, per PitchBook data, and a full 33% are companies specifically related to software. The acquisition of enterprise management provider Quest Software represents the firm’s most significant deal of the past few years.

From a more big-picture perspective, a look at private equity deal flow in the software sector over the past four years reveals the degree to which the industry’s interest has grown. Global deal count in the space swelled from 604 in 2013 to 1,009 in 2016, according to the PitchBook Platform, a 67% overall uptick. It’s been a steady rise, with YoY activity rising 25% in 2014, 18% in 2015 and 24% last year, as this graph of annual deal flow displays:

Global PE activity in software

Warburg Pincus, Francisco Partners

Warburg Pincus

Early returns from 2017, however, indicate that those figures may be flattening. Investors have completed 187 private equity deals with software companies so far in 2017, on pace for a decline from last year—although it’s worth noting there’s almost surely some degree of lag in that number.

And to be fair, the rate of decline is much lower in the software sector than it is across private equity as a whole. Current 2017 software deal count sits at about 22% of last year’s total, compared to 13% for overall private equity activity.

Want to learn more about PE’s ongoing interest in the software space? PitchBook Platform subscribers can view more trends, top investors and much more right here.

Article by Kevin Dowd, PitchBook