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Dealwatch: Software sector proves bullish against Covid turmoil as elite firms line up on big-ticket buyouts

Dealmakers have been Zoom-toasting a raft of strategic buyouts this week, with the software sector proving one of the most resilient amid the coronavirus crisis, demonstrated by Aveva’s $5bn acquisition of OSIsoft and Hg’s investment in Visma.

London-listed industrial software giant Aveva Group’s $5bn buyout of California-headquartered data software company OSIsoft stood firm as an example of sector resilience, fielding teams from Ashurst, Debevoise & Plimpton,  Latham & Watkins, Slaughter and May and Fenwick & West on this transformational deal.

As part of the acquisition, Aveva will issue consideration shares worth around $0.6bn based on the current Aveva share price, to a company majority owned by OSIsoft’s founder, Dr J Patrick Kennedy, who will be appointed as chairman emeritus of Aveva following completion of the buyout.

The acquisition debt financing has been arranged by Barclays, BNP Paribas and JP Morgan and comprises a $3.6bn debt bridge to equity facility, a $900m term loan and a £250m revolving credit facility.

The Ashurst team advising Aveva is led by London corporate partner Karen Davies, supported by equity capital markets partner Stuart Rubin, while banking advice is being provided by partners Tim Rennie, Nicholas Moore, Michael Neary and Brenton Key.

Competition partners Neil Cuninghame, Steven Vaz and Ross Zaurrini also acted on the deal, along with tax partners Tim Gummer and Sharon Kim and IP partner Chris Bates.

The Debevoise team acting as US counsel to Aveva was led by New York M&A partner Paul Bird and included finance partner Alan Davies, tax partner Gary Friedman, benefits partner Jon Lewis, IP partner Henry Lebowitz, cybersecurity partner Luke Dembosky, real estate partner Edward Rishty and antitrust partners Ted Hassi and Timothy McIver.

The Latham team advising the banks was led by Chris Horton and included Ross Anderson.

Fenwick & West is acting for OSIsoft, with a team led by M&A partner Kris Withrow, while Slaughters’ Richard Smith is advising the target on the UK law aspects of the acquisition and combined circular and prospectus.

Speaking to Legal Business, Ashurst’s Karen Davies said: ‘If you had told me we would be able to do a deal like this from beginning to end working remotely, I wouldn’t have believed it. But the teamwork and collaboration between both the internal and external teams has been fantastic.’

She noted that longstanding client Aveva has gone from strength to strength, with the Schneider Electric deal turning it into a FTSE 100 company, while praising the ‘seriously impressive’ team for its acumen in identifying strategic opportunities for another transformational transaction. The latest deal has the potential to turn Aveva into a company with a market capitalisation of £10bn.

‘Deals like this show that certain sectors are very resilient and, for the right companies, there are great strategic opportunities in the market,’ observed Davies.

Another deal demonstrating the bullishness of the sector was Hg’s Saturn 2 fund’s further investment in Visma, a provider of business-critical software to private and public enterprises in the Nordic, Benelux and Baltic regions. The transaction values the business at an enterprise value of NOK 110bn ($12.2bn), making it the largest software buyout globally to date.

Skadden, Arps, Slate, Meagher & Flom, Linklaters and Kirkland & Ellis all advised on the deal, on which one partner close to the deal commented: ‘In tech and software businesses there is huge demand. Dealmaking continues to roll on through the crisis and the new investors coming into Visma shows that this sector is incredibly resilient. There are a lot of PE players wanting to deploy capital and with working from home leading to greater demand, cloud software-based businesses are bullish.’

The deal will see the Hg Saturn 2 fund buy the stake from private equity firm Montagu, which had been invested in the company since 2010, along with other investors including Hg’s Genesis 7 fund, which is reducing its stake in Visma.

Warburg Pincus and TPG will invest in the company for the first time to acquire minority stakes and existing investors including CPPIB will increase their stakes.

Hg will own around 54% of Visma and GIC, ICG, CPPIB, Warburg Pincus, TPG, General Atlantic and management will own the remainder on completion. Hg led the original delisting of Visma from the Oslo Stock Exchange in 2006 and has been the lead or co-lead investor in Visma for the last 14 years.

The Skadden M&A team acting for Hg was led by London corporate partner Richard Youle and also included Brussels antitrust partner Giorgio Motta.

Alex Woodward at Linklaters was sell-side adviser and Kirkland advised on the financing with a team led by City debt finance partner Neel Sachdev.

Elsewhere, Travers Smith and Dickson Minto won mandates on Pensions Infrastructure Platform’s (PiP) acquisition by Foresight Group, a deal that closed on 18 August.

Infrastructure investment platform PiP was established in 2013 under the leadership of the Pensions and Lifetime Savings Association to facilitate long-term investment into UK infrastructure by pension schemes. It is backed by the British Airways pension scheme, the Pension Protection Fund, Railpen and local government pension schemes Strathclyde and West Midlands.

The acquisition will see the PiP platform and portfolio continue within Foresight and the team continue to manage PiP’s assets and relationships with its investors. It will also see PiP CEO Paula Burgess become a partner of Foresight.

The deal means that Foresight’s assets under management will have grown by 38% (£1.8bn) to £6.5bn.

John Pentland at Dickson Minto advised Foresight, while a Travers team led by corporate partner Mohammed Senouci and funds partner Sam Kay acted for PiP.

Senouci told Legal Business that the deal, which was the result of a competitive auction, was not particularly held back by remote working as many of the commercial negotiations had already taken place pre-lockdown.

Noted Senouci: ‘The strategic rationale was key to this transaction. PiP is a very lean organisation and it was looking for a platform that offered opportunities to continue building relationships with pension fund investors from a much stronger position.

‘This is an example of a transaction that made perfect strategic sense for both parties. Unlike a number of auction processes, which can be quite fraught, there was a huge amount of goodwill and a strong desire on both sides to get the deal done,’ he said.

In the broader market, Senouci has noticed a resurgence in the dormant capital markets that has moved from companies seeking recapitalisations to deal with the impact of Covid to increased IPO activity.

Finally, and speaking to that trend, Latham confirmed it was acting on Airbnb’s proposed IPO as the property rental company filed paperwork with the Securities and Exchange Commission.

Further details of the float have not been disclosed yet, but it will be interesting to see how the transaction fares at a time when those businesses dependent on unrestricted travel have been so heavily impacted by the continuing spread of the pandemic.