PE EQT takes majority stake in IFS

One of the few remaining independent mid market ERP providers is about to come under PE ownership as EQT VII takes a majority stake in Swedish IFS. It will follow up with a mandatory bid for the remaining shares within the next four weeks, which is unlikely to be contested as the initial shares were acquired from key shareholders.

EQT is paying a premium of c20% on the average share price over the past six months, representing a valuation of 9.05 SEK/$1.04bn/£69m. In the first nine months IFS reported revenue of 2.4bn SEK with 180m SEK operating profit. In Q3 revenue was up 1% to 772 SEK (see here) - and that’s the crux of the matter. Although IFS has been growing well, benefitting from its focus on thee key verticals (Oil and Gas, Aerospace and Defence, Field Service Management), and a lower cost proposition that enables it to go head-to-head with SAP and Oracle, EQT believes it can do more.

We see the move as being positive for IFS because it will help scale the company at a time when mid market providers have a window of opportunity to take market share from the mainstream tier 1 vendors. For more thoughts on what this means for IFS and analysis of the impact of the broader trend for PE investment in mid market ERP providers, see HotViewsExtra here. Unit4, Advanced Computer Systems (ACS), Access Technology Group, and of course Infor have all been acquired by private equity firms. It’s early days for ACS and Access, but Unit4 and Infor are thriving.  

Posted by Angela Eager at '18:28' - Tagged: erp   acquisition   software   privateequity