Charles Jones raises large software buyout fund

One of our favourite people, former Geac CEO Charles Jones (and Wellington advisory council member), announced yesterday that he had raised $400 million in limited partnership capital for a dedicated software buyout fund. For anyone who tracks the space, this is big and welcome news.

How many GPs in North America have that kind of firepower to tackle going private deals, recaps, PIPEs and, if needed, hostile takeovers? Not many.

While the hedgies come and go, and a few large sponsored go-privates have been announced in the USA, few folks have the capital and expertise to make a medium to large merchant banking deal work in tech land. Only Constellation Software and Birch Hill Equity Partners (Dave Samuel) comes immediately to mind.

Think of all the tech opportunities over the past few years that were only lacking the kick-start to an M&A process or even just a simple recap: Cedara (at $1.20/share), Corel (anon), Creo (at $8.75/share), DataMirror (of late), Geac (at $1.80/share), Hummingbird (at $14/share), Pivotal, Telus (at $12/share), etc., etc. Most of these ideas were pitched at the time, and there were no takers: both passive and active players passed. Geac and Telus ultimately raised equity (Orion and TDSI respectively) as a result of hard working i-bankers and institutional salesmen, but the active guys couldn’t get their heads around any of the deal opportunities; toeholds don’t count.

With this news, now there’s someone with the experience, judgment, intellect and chequebook to tackle a lot of situations that were otherwise pregnant, but lacked a player like this to pull the trigger. The one thing I will say is this: if you’re trying to sell him a so-so software business for 4x revenue, he might not be your guy…but I’ll leave that to him to break the news.

Charles and I have worked on four or five tech deals over the years and his limited partners are lucky to have convinced him to stay away from the mega-buyout firms that were keen on his skillset post-Geac. He’ll enjoy having his own shingle, as well.

Congrats to Charles and his new/old team!

MRM

Presentation to RBC Growth