A Decade Later, SunGard Will Return To NYSE With IPO

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Sungard

Almost a decade after being acquired by seven private equity firms, Wayne, Pa software firm SunGard Data Systems is preparing for an initial public offering. J.P. Morgan Chase & Co. and Goldman Sachs Group are reportedly set to lead the IPO with the goal of raising $750 million.

6.5.2014 sungard
SunGard began as the software development arm of Sunoco.

Formed as a spin-off of Sun Oil Co. in 1983, SunGard provides software and related services to banks, governments and schools and employs 13,000 people. They have been listed on the Fortune 500 – coming in at 585 in 2014 and 550 in 2013 – fueled by an aggressive acquisition strategy that has lead to tremendous growth. Over the past two decades the company has completed over 150 of them.

The company was acquired for $11 billion in 2005 by a group of private equity firms, including Bain Capital, Blackstone Group, Goldman Sachs Capital Partners, KKR & Co., Providence Equity Partners Inc., Silver Lake Partners and TPG Capital.

The deal became one of the first of in a trend of mega-buyouts that occurred before the financial crisis. Several firms would team up, buy companies they couldn’t afford on their own and load them with debt to help finance the deals, only to see them struggle during the recession. SunGard was able to manage its debt load during the crisis, but it was hit by a drop in revenue caused by the struggles of the banks. Between 2009 and 2010, Sungard’s revenue from its largest customers dropped 9%.

Russell P. Fradin, SunGard CEO.
Russell P. Fradin, SunGard CEO.

The price of the IPO has not been announced and parts of the business have been sold or split off. SunGard had about $4.7 billion in total debt at the end of 2014 and the company expects to use net proceeds to repay debt. Since then, enormous multi-group buyouts have fallen out of favor for a variety of reasons, ranging from complexity to fear of collusion.

The company itself posted losses of $221 million on $2.8 billion in revenue in 2014 and is considering offers for  outright purchase. Deutsche Bank AG, Barclay’s and Credit Suisse Group AG are working on the deal.

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