Eze Software Group, which is backed by TPG, is pursuing a dividend recap.
Boston-based Eze Software is in the market with a $115 million add-on loan that it plans to use to pay out a $123 million distribution to shareholders, Moody’s Investors Service said in a June 2 note. The dividend is on top of a $56 million distribution Eze paid out in May, S&P Global Ratings said on June 1.
S&P said the dividends will cause Eze’s leverage to rise to 6.6x debt to EBITDA from 5.4x as of March 31. “We expect that Eze Castle’s stable and consistent operating performance will allow it to modestly reduce its pro forma leverage to the low- to mid-6x area by the end of fiscal 2016,” S&P said.
TPG acquired Eze Castle Software and Realtick in April 2013 to form Eze Software Group. The deal value was $1.9 billion, Buyouts Insider reported. Eze provides trading software mainly for hedge funds. The company is expected to generate about $290 million in 2016 revenue, Moody’s said.
Rumors of an Eze sale have been floating around “for a few months,” one banker said. A second banker said Eze was “not officially” up for sale. A third banking source said Eze was not on the block.
“It’s a good time for [TPG] to sell Eze to another PE group,” a fourth banker said, noting that a natural buyer of Eze would be ION Trading. Carlyle Group invested about $400 million in Ion Investment Group, parent of Ion Trading, in late May. “It might be too early for ION,” the fourth source said.
In May, TPG closed its latest North-American- and European-focused private equity fund at $10.5 billion. The buyout shop’s prior fund, TPG Partners VI LP, raised $19.8 billion in 2008.
Executives for TPG and Eze declined comment.
Action Item: To contact Eze Software call +1 617 316 1000
Photo of James Coulter, co-founder of TPG Capital, courtesy of Reuters/Sean Gardner