KKR to generate 25 pct IRR on Epicor, AlpInvest leads Kinderhook Fund III recapitalization, Webster Equity targets $1bn for first healthcare-only fund

The tech M&A market is picking up in volume and Webster Equity is seeking to raise $1 billion for its inaugural healthcare-focused fund.

Happy Wednesday, Dear Tech Take Readers!

We’ve had quite a summer, haven’t we? With Labor Day weekend approaching, the tech M&A market is picking up in volume.

Just recently, I wrote that KKR-backed Epicor Software had returned to the market. Now that the ERP [enterprise resource planning] software company has been acquired by Clayton, Dubilier & Rice for $4.7 billion, I want to share a bit of what happened behind the scenes during KKR’s four-year-long hold.

For KKR, which has invested north of $15 billion in technology since 2015, Epicor appears to be the biggest enterprise software deal of 2020.

The exit also marks a successful deal for the firm’s shareholders. KKR extracted $610 million in a $2.8 billion dividend recap of the company back in June, KKR Partner John Park told me in an interview this week.

Park, chairman of the Epicor board and head of Americas Technology Private Equity at KKR, also dug into the company’s recent dividend recap, the covid-19 impact and its expansion through cloud adoption.
This investment is emblematic of where KKR has traditionally leaned in as an institution, in terms of identifying assets with complexity where KKR can add value to companies and bring the firm-wide resources to bear, Park said.

According to the investor, a portability debt feature to the recap provided KKR with complete control over the timing of an eventual exit.

Now, KKR is set to realize north of 25 percent IRR on sale of Epicor after the four-year hold, sources close to KKR told me. KKR declined to comment on the returns.

Check out my full story.

Top Scoops
Information Builders
In other recent tech news, Goldman Sachs Private Capital officially kicked off a sale process for Information Builders, a business intelligence and data analytics software company, sources told me.
Shea & Co, a Boston-based boutique investment bank specializing in software M&A, is advising the company on its sale. PE Hub first reported on the adviser engagement in March.

For more on the auction’s timeline and company’s financials, read my recent story on PE Hub.

We have confirmation on an earlier Buyouts scoop. AlpInvest Partners led a restructuring of Kinderhook’s 2009 vintage Fund III, the firms announced Tuesday. Total value of the deal was $460 million, which included the aggregate value of the portfolio, which was about $360 million, as well as $100 million of capital to grow the portfolio from remaining LPs and AlpInvest.

Earlier in 2020, AlpInvest had committed $65 million of preferred equity to facilitate follow-on investments in Fund III, Kinderhook said in a statement. Kinderhook said Fund III LPs are receiving premium value above the assets’ original cost basis and exceeding the March 31, 2020 portfolio company net asset value. Read more here.

That’s all from me today! As usual, reach me with any feedback, tips, comments or suggestions at mvinn@buyoutsinsider.com.