How TA turned $90m into $6.12bn on ZoomInfo

Carlyle Group also saw a big paper gain of 13x its equity investment in ZoomInfo in nearly two years, sources told PE Hub.

Amid all the bad news in the market dislocation, here’s a success story: TA Associates turned its 2014, $90 million investment in ZoomInfo into a valuation of $6.12 billion in the company’s public offering in June. That represents the largest paper return in the firm’s history.

ZoomInfo, which provides a cloud-based intelligence platform for sales and marketing teams, began trading on Nasdaq on June 4. Its stock, initially priced at $21 per share, soared 90 percent in first day trading as market fluctuated in the coronavirus downturn.

The company’s founders Henry Schuck and Kirk Brown, who own 10 percent and 7.3 percent of the company, respectively, became billionaires after the stock has almost doubled post-IPO.

However, for ZoomInfo’s private equity investors: TA Associates, Carlyle Group and 22C Capital, the company’s IPO became a great success too.

TA owns 123 million shares of ZoomInfo’s stock, or 36 percent of the company, according to the company’s S-1 filing. That stake translates into $6.12 billion based on the company’s stock price, which traded at $49.68 per share at the market close on Tuesday, June 23.

That valuation could change with the market and most firms are prevented from immediately cashing out of their stakes in a public offering. Certain kinds of tech companies have thrived in the downturn, while other sorts of business like those exposed to hospitality and travel have struggled.

In 2014, TA acquired a 50 percent stake in the company, called DiscoverOrg at the time, for $90 million. 22C Capital also invested in the company then, alongside TA. In March 2018, Carlyle Group made a minority investment in the company of around $500 million, of which nearly $400 million was equity, sources familiar with the transaction told PE Hub. That deal valued the company at nearly $2 billion at that time, the sources said.

Carlyle owns 31 percent of ZoomInfo, which translates into $5.27 billion, assuming the $49.68 share price. That means that on paper, Carlyle would return 13x its equity in nearly two years, if the firm was to sell its shares today.

“ZoomInfo has the founder-led culture, financial performance, market position and high value-add to its customer base that are features that attract us, at Carlyle, to great technology businesses,” Ashley Evans, principal on the TMT team at Carlyle and a board member of ZoomInfo, said.

Even after the stake sale to Carlyle, TA’s equity in the company appreciated nearly 80x, sources familiar with the firm told PE Hub. TA doesn’t own any debt on ZoomInfo’s investment, the source said.

For TA Associates, ZoomInfo marks another big gain in 2020, as the firm has been having a successful run with a number of its tech investments.

This year, the firm successfully sold stakes in MRI Software, making roughly 5x on its stake sale to Harvest Partners; and in Conservice, selling a 50 percent stake in the company to Advent International and making north of 6x its initial investment.

On June 23, the firm also announced it sold a part of its stake in Aptean, an enterprise resource planning (ERP) and supply chain, to Charlesbank. TA Associates reinvested in the company, which is also backed by Vista Equity. TA made 3.5x its money on the stake sale, sources familiar with the deal told PE Hub.

TA Associates declined to comment for the story.

Action Item: Read more about TA’s Conservice deal here.