(Reuters) TPG Global LLC is considering a sale of Vertafore Inc, hoping a deal will value the U.S. provider of software to the insurance industry at more than $2.5 billion including debt, according to three people familiar with the matter, Reuters reported.
The move illustrates how insurance software companies have been growing in recent years as technological advances allow customers instant access to their information and help insurance providers cut costs.
TPG has hired Bank of America Corp (BAC.N) to explore a range of options for Vertafore, the people said on Tuesday.
These include a refinancing of Vertafore’s debt; Vertafore borrowing further so it can pay TPG a special dividend; and strategic alternatives including a sale of Vertafore, the people added.
Vertafore has annual earnings before interest, taxes, depreciation and amortization of around $180 million, the people added. There is no certainty that TPG will decide to sell Vertafore, the people added.
The sources asked not to be identified because the deliberations are confidential. TPG, Vertafore and Bank of America declined to comment.
Based in Bothell, Washington, Vertafore provides software to property and casualty insurance carriers that helps process claims. TPG acquired the company in 2010 from buyout firms Hellman & Friedman LLC and JMI Equity for $1.4 billion.
The insurance software sector’s strong cash flow has made it popular with private equity firms. For example, Hellman & Friedman in 2014 acquired Applied Systems, a Vertafore competitor, from private equity firm Bain Capital LLC for $1.8 billion.
(Reporting by Greg Roumeliotis in New York; Editing by Cynthia Osterman)