EQT sells stake in IFS to TA Associates in €3bn deal

As part of the deal, the majority stake in IFS owned by EQT was transferred from EQT VII to its successor funds EQT VIII and EQT IX.

The deal is expected to close at the end of August 2020.

According to a source close to the deal, the process for the partial exit was driven entirely by TA, which was not one of the bidders during the original sale process launched by EQT. The source said that there were other deals, but that they were at lower levels. 

TA put in a minority bid for IFS, which opened up an opportunity for EQT VIII and EQT IX to invest in the company. The source said the bid offered by the US-based GP provided a better opportunity for IFS than the other bids offered. 

EQT had at the beginning of this year launched a process to sell 100% of the company. According to sister publication Mergermarket, several PE firms, including Astorg, Cinven, TPG, Permira, KKR and CVC, had submitted offers for the company. 

However, Bloomberg reported in April that the process was halted by EQT, anticipating prospective buyers would seek to negotiate for a discount citing the Covid-19 crisis. 

EQT's seventh fund in 2015 acquired a 68% stake in IFS for around around SEK 5.46bn in a take-private transaction. According to the GP, IFS has since doubled its revenues to SEK 7.3bn, quadrupled its EBITDA and increased the number of employees by 50%. In 2019, it reported an EBITDA of SEK 1.45bn ($158m). 

IFS has embarked on an acquisitive growth strategy under EQT's ownership, recently acquiring companies WorkWave and Astea. 

Following the deal, EQT VIII will be 80-85% deployed; remaining commitments will be used for add-on acquisitions and capital injections. The GP's new fund, EQT IX, will be 5-10% deployed based on its target fund size of €14.75bn. The vehicle is expected to reach its target by Q3 this year.  

Darren Roos, CEO of IFS, said: "The IFS and EQT VII partnership has been excellent. EQT's expertise within software and digitalisation has played a critical role in supporting IFS on our growth journey. We look forward to continuing our development journey together with EQT and TA Associates.”

Company
Founded in 1983 and headquartered in Linköping, IFS develops and delivers enterprise software for clients that manufacture and distribute goods, build and maintain assets, and manage service-focused operations. The company employs 4,000 people and has more than 10,000 customers around the world.

People
IFS – Darren Roos (CEO).
TA Associates – Naveen Wadhera (managing director)
EQT – Per Franzén, Robert Maclean, Johannes Reichel (partners).

Advisers
Vendor – JP Morgan (financial due diligence); Goldman Sachs (financial due diligence); Jefferies (financial due diligence).
Equity – Arma Partners (corporate finance).

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• Topics
• Buyouts
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• Secondary buyout
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• EQT
• TA Associates