Coronavirus: Private equity dealmaking hit as $20 billion in tech buyout sales halted

Buyout firms are halting sale processes for European technology companies worth nearly $20 billion, as the market turmoil starts to crimp dealmaking in an industry that’s been a bright spot amid the coronavirus pandemic.

Billionaire Robert F. Smith’s Vista Equity Partners is putting the sale of a stake in payments giant Finastra on hold after soliciting interest from potential buyers, people with knowledge of the matter said. The US investment firm was seeking to sell as much as 50 percent of London-based Finastra in a deal valuing the business at more than $10 billion including debt, Bloomberg News reported in October.

Investors in Visma Group have also halted a minority stake sale in the Norwegian cloud software developer, according to the people, who asked not to be identified because the information is private. Visma’s backers, including European buyout firm Hg, were seeking to value the company at about 7 billion euros ($7.6 billion) including debt, people with knowledge of the matter said in August.

The virus has made dealmaking a lot harder, throwing the global economy into disarray and discouraging lenders from providing financing. Bidders brave enough to pursue acquisitions are looking for discounts to reflect the added risk.

Software investments

Some smaller processes have been pushed back as well. European private equity firm Vitruvian Partners recently hired advisers for a sale of Unifaun, a Nordic transportation software marker, according to the people. It has decided to defer the start of an auction process until later this year, the people said.

Vector Capital is also pausing its sale of marketing software developer Emarsys after collecting first-round bids, the people said. Emarsys, which was founded in 2000, provides cloud products used by brands including Samsonite, Helly Hansen and Char-Broil to engage with customers.

The situation is fluid, and the deal processes could proceed when the coronavirus outbreak eases, the people said. Representatives for Vista, Finastra, Hg, Visma, Vitruvian and Vector Capital declined to comment. Emarsys and Unifaun didn’t immediately respond to requests for comment.

Strategic buyers

Some private equity firms may wager they can achieve their price expectations if they hold onto a business for longer. Still, the difficulty the investment firms face in finding buyers in this environment contrasts with a string of strategic deals that have been announced in the technology industry in recent weeks.

Microsoft Corp. agreed in March to pay about $1.35 billion to acquire 5G software maker Affirmed Networks Inc., Bloomberg News reported at the time. MaxLinear Inc. said this month it will buy Intel Corp.’s unit for home internet access gear, while Verizon Communications Inc. recently announced the acquisition of videoconferencing company Blue Jeans Network Inc.

German tech giant SAP SE is also exploring the sale of a mobile network software unit, people with knowledge of the matter said last week.

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