UK-based private equity firm 3i has acquired Magnitude Software, an American provider of ERP software, from investor Audax Private Equity and the company’s management. International network OC&C Strategy Consultants advised 3i on the deal.
Based in London, 3i is an international investment manager focused on mid-market private equity and infrastructure. Its core investment markets are northern Europe and North America. The company generated a total return of £258 million, or 15.4% on opening net asset value for the financial year ending 31 March 2019, exceeding its medium-term growth target of 8%-10% per annum. As 3i looks to build on a solid year of growth, the firm has invested in application data management provider Magnitude Software.
Headquartered in Austin, Texas, Magnitude is a provider of enterprise information management software operating in the US, the Netherlands, UK, Canada and India. The firm delivers insights on business performance in heterogeneous application and fragmented data environments. It has over 1,400 customers globally – including 50% of the Fortune 100 – and maintains strong relationships with leading ERP providers SAP and Oracle, while focusing on global growth across the ERP ecosystem.
The investment will allow the software company’s current private-equity backer, Audax Group, to exit its stake. 3i invests alongside Chris Ney, Chairman and CEO of Magnitude, and other senior executives, who will maintain a significant minority stake in the business. The enterprise value of the transaction is $340 million, while the value of 3i’s investment is $179 million.
Commenting on the news, Tim Mack, Managing Director at Audax Group, said, “The Magnitude team has built a global business and a portfolio of award-winning software solutions that help enterprises unify fragmented data and deliver actionable insights for critical business decisions. We wish continued success for Chris and his team as they enter the next stage of growth with 3i.”
Chris Ney, Chairman & CEO of Magnitude added, “Audax has been a valuable partner in helping us build and transform Magnitude through organic growth and acquisitions. We are well-positioned for our next significant growth phase as we continue to expand on a global scale. We look forward to partnering with 3i to leverage our global acquisition strategy, technology innovation, and scalable platform to profitably deliver even greater value to our growing blue-chip customer base.”
Ropes and Gray served as legal advisor to the deal, while Shea & Company served as the financial advisor of Magnitude. Kirkland & Ellis served as legal advisor to 3i, and international professional services firm OC&C Strategy Consultants supported 3i by advising on the move. OC&C, is a global advisor to investors and corporate clients in the technology and software sector, and its team was led by UK-based Partner Chris Woodland and US-based Partners Turkmen Deniz and Ed Plummer.
"OC&C is a leading advisor to investors and corporate clients in TMT, with expertise in software, comms and technology where we have advised on landmark recent deals within the broader TMT sectors," said a statement from the advisory firm. "OC&C also works extensively with global corporations in this space to develop their strategy and commercial performance. We are delighted to have supported 3i in this transaction.”