Private Equity Firm Acquires Stake In SoftwareONE To Drive M&A

Private equity giant KKR has purchased a 25 percent stake of $3.3 billion solution provider SoftwareONE to provide money for future mergers and acquisitions, according to KKR.

The KKR investment is intended to help SoftwareONE, No. 14 on the 2015 CRN Solution Provider 500, grow its business in the United States and Asia, according to Johannes Huth, head of KKR Europe, Middle East and Africa.

The four founding partners of SoftwareONE, which has its U.S. headquarters in Waukesha, Wis., will retain a 75 percent stake and its company and continue to have sole responsibility for managing the company. KKR's investment in SoftwareONE will come primarily from its European Fund IV.

[Sources: SoftwareONE Is In Talks To Acquire Zones' Licensing Business]

"Proliferation of software application, growth in cloud adoption and increasing complexity of enterprise IT environments is the new reality," Jean-Pierre Saad, director of KKR's private equity technology team in Europe, said in a statement. "We are delighted to accompany SoftwareONE in this journey and provide them with growth capital for further organic expansion and M&A."

Financial terms for the acquisition, which is expected to close in the fall, were not disclosed. New York-based KKR and SoftwareONE, which has 2,500 employees and 25,000 customers around 115 countries, didn't respond to requests for additional comment.

SoftwareONE has been quite active in the M&A market in recent months as the ranks of Licensing Solution Providers (LSPs) -- which are the only Microsoft solution providers authorized to handle software volume licensing transactions -- continue to dwindle.

SoftwareONE bought the Microsoft software licensing business, contracts management and software portfolio services of $2.2 billion Dallas system integrator CompuCom in March. And CRN reported last month that SoftwareONE was in advanced, "very serious" talks to acquire the licensing business of Auburn, Wash.-based Zones, No. 30 on the CRN SP 500.

Sources told CRN in November that Redmond, Wash.-based Microsoft was looking to reduce its number of U.S. LSPs from 15 to six as the vendor puts a greater emphasis on cloud, mobility and services sales. To wit, SoftwareONE CEO Patrick Winter said in a statement that the KKR acquisition should allow the company to provide more cloud and value-added services to its customers.

"The software industry is changing, and together with KKR, we see a unique opportunity to capitalize on those changes," Winter said.

Microsoft has put pressure on channel partners to increase deployment and consumption of its cloud services over the next 12 months, with a particular focus on adding value to these cloud solutions, sources told CRN.

SoftwareONE has been rapidly expanding outside its Microsoft licensing business as well, delivering total year-over-year growth in excess of 40 percent since 2006, according to the company's website.

KKR, meanwhile, has also been active in the IT market, investing in solution provider TASC in 2009, Web hosting company GoDaddy in 2011, consumer electronics company Sonos in 2012 and next-generation endpoint security startup Cylance last month. The private equity firm also acquired construction industry software maker On Center Software in 2013, and took part in bidding wars for BMC Software.

PUBLISHED AUG. 17, 2015