KKR, ABRY Eye Software Sales Amid Dry Powder Pileup

KKR, ABRY Eye Software Sales Amid Dry Powder Pileup
By Kohlberg Kravis Roberts (http://www.kkr.com/KKR_Logo.svg) [Public domain], via Wikimedia Commons

Private equity dry powder levels have reached record highs, and no sector is currently hotter for PE firms than the software space.

Play Quizzes 4

That confluence of factors has certain sellers licking their chops. ABRY Partners and KKR are the latest, with the two firms both reportedly considering billion-dollar exits from software companies in deals that would seem to generate highly appetizing returns.

ABRY Partners is close to a deal to sell Securus Technologies, a provider of phone ser vices and related tech for US prisons, to Platinum Equity for an enterprise value of around $1.5 billion, according to Reuters. That would be a significantly larger number than the $640 million ABRY is reported to have paid in its 2013 acquisition of the company.

Alight Capital Outperforms As Fund Positions For Uncertainty

Invest ESG Leon CoopermanAlight Capital Management declined 1.3% on a net basis for the first quarter of 2022, according to a copy of the firm's quarterly update, which ValueWalk has been able to review. Short positions offset most of the losses on the long side of the portfolio. The long/short equity fund exited the quarter with a net Read More

That transaction would take place in a communications software sub-sector that’s been the site of very consistent private equity activity in recent years, somewhat in contrast to the increasing rate of IT deals overall. Investors have completed between 26 and 28 deals in the space in four of the past five years, per the PitchBook Platform, with the only exception—21 deals in 2013—not serving as too stark an outlier. And the capital’s been coming from many different sources: No firm has completed more than six deals in the space since the start of 2008.

In a separate development (and on a separate continent), KKR is considering the sale of its 31% stake in Visma, a Norwegian provider of software and HR services, for about €1 billion; a deal in that ballpark would value the company at about €3 billion. That would represent a 2.5x multiple for KKR, which first acquired an interest in Visma from HgCapital in 2010 at an enterprise value of €1.2 billion.

If KKR looks to PE for potential buyers, it should have no lack of candidates. Private equity firms are flocking to the European software space in recent years, with PE deal flow rising from 206 completed transactions in 2013 to 368 last year, per PitchBook data. The new year is so far tracking similarly, with 126 completed deals through four-plus months—on pace to approach 2016’s total even without considering the likely lag in deal reporting.

With all that interest, some sellers are in the potential to name their price. KKR and ABRY Partners may be next in line to capitalize.

PitchBook subscribers can take a closer look at the data on PE investment in communication software and Europe’s software space.

Article by Kevin Dowd, PitchBook

Updated on

No posts to display