SunGard Prepares IPO, Aims to Raise Around $750 Million -- Update

By Gillian Tan And Telis Demos 

SunGard Data Systems Inc. is preparing for an initial public offering nearly a decade after a group of private-equity firms acquired it in the wave of megabuyouts that preceded the financial crisis, according to people familiar with the matter.

The developer of software for banks, schools and governments tapped J.P. Morgan Chase & Co. and Goldman Sachs Group Inc. to lead an IPO later this year, the people said. It aims to raise around $750 million in the IPO, some of the people said.

SunGard, of Wayne, Pa., also plans to consider a sale, though an IPO is the company's current focus, the people said. It is targeting a market value of around $7 billion, some of the people said.

An IPO would allow SunGard's private-equity owners to eventually cash out of the company, one of the first deals in the precrisis buyout boom. Bain Capital, Blackstone Group LP, Goldman Sachs's private-equity arm, KKR & Co., Providence Equity Partners Inc., Silver Lake and TPG teamed up to pay about $11 billion for the company in a deal that closed in August 2005.

Such "club deals" were common in the buyout boom but have since fallen out of favor amid allegations of collusion and because of their complexity.

It isn't clear how the private-equity firms would make out in an IPO. The company has already split off or sold parts of the business, and the price of the IPO is still in flux. In addition, SunGard had about $4.7 billion in total debt at the end of 2014, according to regulatory filings.

SunGard is among the last of its kind. Most other club buyouts of its era, such as Hertz Global Holdings Inc. in 2005 or Freescale Semiconductor Ltd. in 2006, already have gone public, been sold or filed for bankruptcy. Public offerings of private-equity-backed companies have surged over the past few years, with money raised from such deals at a record high of $86 billion globally in 2014.

Private-equity firms typically sell or IPO companies they acquire within six years, according to data provider Preqin Ltd. SunGard's backers faced hurdles integrating the various business lines the company picked up through a spate of deal-making before and after the 2005 buyout, people familiar with the company said.

Its largest segment by revenue, SunGard Financial Services, sells software and technology to banks, ranging from trading infrastructure to pricing data. The company's public sector and education segment, meanwhile, works with K-12 educational institutions and government agencies.

Over the past few years, the private-equity firms have trimmed SunGard's businesses. Last year, SunGard split off its availability services business, which had annual revenue of about $1.8 billion. In 2011, it sold its higher education business for $1.8 billion to what is now known as Ellucian Inc.

In 2014, SunGard posted a loss of $224 million on revenue of $2.8 billion, according to regulatory filings.

Write to Gillian Tan at [e-mail] and Telis Demos at [e-mail]

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