By Gillian Tan And Telis Demos
SunGard Data Systems Inc. is preparing for an initial public
offering nearly a decade after a group of private-equity firms
acquired it in the wave of megabuyouts that preceded the financial
crisis, according to people familiar with the matter.
The developer of software for banks, schools and governments
tapped J.P. Morgan Chase & Co. and Goldman Sachs Group Inc. to
lead an IPO later this year, the people said. It aims to raise
around $750 million in the IPO, some of the people said.
SunGard, of Wayne, Pa., also plans to consider a sale, though an
IPO is the company's current focus, the people said. It is
targeting a market value of around $7 billion, some of the people
said.
An IPO would allow SunGard's private-equity owners to eventually
cash out of the company, one of the first deals in the precrisis
buyout boom. Bain Capital, Blackstone Group LP, Goldman Sachs's
private-equity arm, KKR & Co., Providence Equity Partners Inc.,
Silver Lake and TPG teamed up to pay about $11 billion for the
company in a deal that closed in August 2005.
Such "club deals" were common in the buyout boom but have since
fallen out of favor amid allegations of collusion and because of
their complexity.
It isn't clear how the private-equity firms would make out in an
IPO. The company has already split off or sold parts of the
business, and the price of the IPO is still in flux. In addition,
SunGard had about $4.7 billion in total debt at the end of 2014,
according to regulatory filings.
SunGard is among the last of its kind. Most other club buyouts
of its era, such as Hertz Global Holdings Inc. in 2005 or Freescale
Semiconductor Ltd. in 2006, already have gone public, been sold or
filed for bankruptcy. Public offerings of private-equity-backed
companies have surged over the past few years, with money raised
from such deals at a record high of $86 billion globally in
2014.
Private-equity firms typically sell or IPO companies they
acquire within six years, according to data provider Preqin Ltd.
SunGard's backers faced hurdles integrating the various business
lines the company picked up through a spate of deal-making before
and after the 2005 buyout, people familiar with the company
said.
Its largest segment by revenue, SunGard Financial Services,
sells software and technology to banks, ranging from trading
infrastructure to pricing data. The company's public sector and
education segment, meanwhile, works with K-12 educational
institutions and government agencies.
Over the past few years, the private-equity firms have trimmed
SunGard's businesses. Last year, SunGard split off its availability
services business, which had annual revenue of about $1.8 billion.
In 2011, it sold its higher education business for $1.8 billion to
what is now known as Ellucian Inc.
In 2014, SunGard posted a loss of $224 million on revenue of
$2.8 billion, according to regulatory filings.
Write to Gillian Tan at gillian.tan@wsj.com and Telis Demos at
telis.demos@wsj.com
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