Waiting six years appears to have worked out for Apax Partners.
The U.K. private equity firm said Monday it agreed to sell its majority stake in TriZetto Corp to Cognizant Technology Solutions Corp for $2.7 billion. BlueCross BlueShield of Tennessee and Cambia Health Solutions also are selling their minority stakes, the statement said. The deal is expected to close in fourth quarter.
“Today’s announcement is great news for the health care industry and the members we serve,” said Christine Lynch, a Cambia spokeswoman, in a statement.
“We believe this is good for BlueCross and our members, and good for TriZetto,” said Mary Danielson, a BlueCross BlueShield of Tennessee spokeswoman, in another statement.
[contextly_sidebar id=”mrADCPvW990D9XAuFWcvlFLPn7d4X5Sy”]Englewood, Colo.-based TriZetto provides information technology services to the healthcare industry. The company generated $682 million revenue as of March 31, Moody’s Investors Service said in a June report.
Apax will nearly triple its investment with the sale, a source said. A relatively long hold, Apax acquired TriZetto in 2008. BlueCross BlueShield and the Regence Group, which changed its name to Cambia in 2011, were minority investors. The deal was valued at $1.4 billion.
Apax put in about $930 million equity in TriZetto, according to an SEC filing from that time. That’s a little less than 70 percent.
While a relatively large equity check, Apax completed its buy of TriZetto in August 2008, roughly one month before Lehman Brothers filed its historic bankruptcy. During the global financial crisis, PE firms often were required to put in 50 percent equity. Apax made only four new investments in 2008, including TriZetto, according to its annual report from that year.
The TriZetto investment came from Apax Europe VII and Apax U.S. VII, the firm’s annual report said. Apax Europe VII closed at 11.2 billion euros in 2007 while U.S. VII raised $856.3 million in 2006. Europe VII Is producing a 4.44 percent IRR since inception as of Sept. 30, 2013, performance data from the California State Teachers’ Retirement System said. Performance data for Apax U.S. VII was not available.
Executives at TriZetto referred calls to Apax.
Photo courtesy of Shutterstock