Thoma Bravo’s Hyland Software pays biggest dividend to date

Thoma Bravo portfolio company Hyland Software is paying shareholders $450 million in its fifth and largest dividend to date.

The Westlake, Ohio, company is still “turning around” its purchases of OneContent and Perceptive in the past couple of years,  Moody’s Investors Service reports.

It bought Perceptive, the software division of Lexmark International, in 2017, and completed its purchase of OneContent, a provider of healthcare IT, from AllScripts, in April of this year.

S&P Global Ratings said the outlook for Hyland was “stable” because it expects the company’s leverage to remain above 7x debt-to-Ebitda over the next 12 months.

Even if Hyland does cut its debt to below 7x, S&P doesn’t “believe it will sustain this reduced level of leverage because it will likely undertake further debt-financed dividends or acquisitions,” the credit-rating company said in an Oct. 10 note.

Hyland has issued a handful of dividends: a $131 million distribution in 2010, another distribution in 2012, a $135 million dividend in 2014 and a $150 million dividend in 2015, according to Moody’s and press reports.

Hyland is a long hold for Thoma Bravo. The investment dates to 2007 when the tech-focused buyout shop was still known as Thoma Cressey Bravo.

Thoma acquired a majority of Hyland, which provides enterprise content management software, for $265 million, according to press reports. At that time the company generated just $89 million in revenue. Annual revenue exceeded $800 million this year, Moody’s said.

In 2013, Thoma Bravo put Hyland up for sale, seeking $1.2 billion for the company, Reuters reported. The process apparently didn’t produce a buyer.

And in 2015, Thoma Bravo and company management recapitalized Hyland, injecting another $715 million of equity into the company. Thoma Bravo used a new fund to recap Hyland, Moody’s said.

Thoma Bravo’s 12th flagship closed on $7.6 billion in 2016. It is currently seeking $11.5 billion for its latest flagship, the Wall Street Journal reported in July. It initially had a target of $10 billion for Thoma Bravo Fund XIII LP, the story said.

In April, Thoma Bravo’s second Discover fund closed on its $2.4 billion hard cap. Thoma Bravo Discover Fund II will focus on middle-market software investments.

Hyland and Thoma Bravo could not immediately be reached for comment.

Action Item: Hyland CEO William Priemer can be reached at bill.priemer@hyland.com.