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TPG sells Eze Software for $1.45 bln, or 14x adjusted Ebitda

  • In 2013, TPG acquired Eze Castle Software and Realtick
  • TPG used $19.8 bln sixth flagship to invest in Eze
  • SS&C closed buy of DST in April

TPG Capital is exiting Eze Software after a five-year hold.

SS&C Technologies Holdings Inc said July 31 that it agreed to buy Eze for $1.45 billion cash. The deal is expected to close in Q4.

Eze, Boston, provides trading software, mainly for hedge funds. It employs 1,050 people. The company produced 2017 adjusted Ebitda of $105 million on $280 million of revenue, a statement from SS&C said. This means Eze is selling for about 14x adjusted Ebitda.

The high multiple caused one GP to quip: “It’s a great country.”

The sale of Eze has long been expected. TPG acquired Eze Castle Software and Realtick in April 2013 to form Eze Software Group, Buyouts has reported. The buyout firm bought Eze for $880 million, one banker said. TPG put the company up for sale in the spring, hiring Morgan Stanley to advise on the process.

SS&C won the auction because it had the highest bid, a third source said. “Eze is a special business with a very strong market position in capital-market software for hedge funds,” the third person said.

Throughout its five-year ownership, TPG received interest from outside parties for Eze, the third source said. So much so that the buyout shop was expected to sell Eze in 2016.

Instead, TPG opted for a dividend recap. Eze paid out $180 million in distributions to shareholders that year, Moody’s said. A year later, in 2017, Eze issued another $100 million dividend to shareholders, Moody’s said.

Founded in 1992, TPG has several investment platforms, including private equity, credit, real estate and hedge funds. In PE, the firm is seeking $11 billion for its eighth flagship vehicle, according to press reports. TPG’s seventh flagship closed on $10.5 billion in 2016.

The investment in Eze came from TPG’s sixth buyout fund, which raised $19.8 billion in 2008.

The Eze transaction is the latest for SS&C. A provider of financial software and services, SS&C has acquired nearly 30 companies over the past decade.

SS&C closed its more than $5 billion buy of DST Systems Inc in April. In June, SS&C completed its acquisition of CACEIS North America, the fund administration business of CACEIS.

The Eze sale continues the trend of back- and middle-office providers enhancing their front-office capabilities, according to Global Custodian.

State Street earlier this month announced its $2.6 billion buy of Charles River Development, a provider of software for institutional investment, wealth management and hedge funds.

Kaivan Shakib, Brad Whitman and Michael O’Neil of Morgan Stanley provided financial advice to Eze/TPG. Amanda McGrady Morrison, Pamela Glazier and Adam Stella of Ropes & Gray were legal counsel.

SS&C could not be reached for comment.

Action Item: Contact Jeffrey Shoreman, Eze Software’s president and CEO, at +1 617-316-1000