US private equity group Thoma Bravo is buying cyber security company SailPoint Technologies for $6.9bn, the latest in a flurry of deals that signals the leveraged buyout market is roaring back to life after a pause amid rising volatility and the war in Ukraine.
Thoma Bravo, which manages more than $100bn in assets, will pay $65.25 a share for SailPoint, two people with direct knowledge of the details told the Financial Times. The deal is expected to be announced later on Monday morning.
Texas-based SailPoint is used by businesses to give employees secure access to remote working software and to protect cloud computing infrastructure from hackers.
The purchase price is a 31.5 per cent premium to SailPoint’s closing share price on Friday and is the second time Thoma Bravo is investing. The group first bought into SailPoint in 2014 and listed it on the New York Stock Exchange three years later. It exited its holding by the end of 2018, filings show.
Monday’s takeover highlights the increased interest in acquisitions among private equity buyers, particularly in the software sector, which sold off sharply at the start of the year.
Thoma Bravo and SailPoint declined to comment.
In March, Thoma Bravo agreed the $10.7bn takeover of enterprise software company Anaplan, the first large takeover after Russia invaded Ukraine in late February.
Elliott Management has also led two large private equity-backed deals this year, taking software company Citrix private alongside Vista Equity Partners for $16.5bn in January, and buying television ratings company Nielsen for $16bn with Canadian group Brookfield late last month.
Private equity groups in the US have been able to raise billions in traditional bank financing, or from private lenders, despite rising geopolitical risks, inflation and the prospect of higher interest rates.
A consortium led by Advent International and Permira Advisers was able to close the $14bn buyout of cyber security company McAfee in early March, raising billions from bank lenders as markets fell sharply in the days after Russia invaded Ukraine.
For its takeover of Anaplan, Thoma Bravo bypassed bank lenders and instead raised financing from a group of private lenders led by Owl Rock, Blackstone, Apollo Global and Golub Capital.
The people with knowledge of the transaction said SailPoint’s financing will also come from private lenders, including some that financed the Anaplan takeover.
Private equity groups had their strongest ever start to the year in the first quarter, deploying vast cash piles accumulated during the pandemic. There were $288bn of private equity-backed deals, a 17 per cent rise compared with the first three months of 2021, according to Refinitiv data.
Bankers and lenders have also told the FT they have seen a sharp rise in private equity deal activity in recent weeks.
However, the market for private equity buyouts comes as the overall deal market slowed sharply this year. Just over $1tn of deals were struck in the first quarter, 23 per cent lower than in the same period last year.