Misys will return to the London Stock Exchange after four years of private equity ownership with a listing that will value the former FTSE 100 software company at about £5.5bn.
Vista Equity Partners bought Misys in 2012 for £1.3bn after the London-based banking software group spent the best part of a decade struggling to recover from the dotcom boom and bust in the late 1990s.
The private equity group plans to raise more than £500m through a flotation of about a quarter of the group, which will be the biggest IPO in London since Worldpay last year. The company will carry an enterprise value of £5.5bn, according to a person briefed on the plans, although this includes about $1bn of debt on the balance sheet.
Vista said that the reformed Misys was a much stronger business than when it was delisted in 2012, having increased its revenue by a factor of 1.7 times and its operating margin to 36 per cent from 20 per cent since 2011.
The Misys float would be the biggest technology IPO in London given it would surpass Sophos, which floated for £1bn in 2015, and will be a far cry from when Misys was first listed at a value of £8m in 1987.
The listing will also prove to be a test of investor appetite for IPOs in London following the Brexit vote, with worries already in other parts of Europe following the failure of Telefónica to float Telxius last week.
The success of the float of Misys will also be watched by Telefónica, which is preparing to list its UK network, O2.
Nadeem Syed, chief executive of Misys, said that the British software company has been transformed since it was taken private.
“The only thing the same is the name above the door,” he said, pointing to an overhaul of the products sold by Misys. It has also been bolstered through mergers with other businesses in the past few years, including Turaz, the former Thomson Reuters Kondor unit, and Hungary’s IND, an online and mobile banking software developer.
The intention to float was welcomed by some UK analysts hoping for bigger technology companies to come to London after chip company Arm Holdings was acquired by SoftBank this year.
Megabuyte, the technology research company, said: “This IPO will be another shot in the arm for the quoted tech sector in the UK, which is still feeling a palpable sense of loss from the departure of Arm earlier this year,” it said in a note.
“London is our back yard and it is natural to come back to the UK markets. We want to send a message that London is a financial centre and is open for business,” said Mr Syed.
Others with longer memories argued that Misys could struggle given its history. Lorne Daniel, an analyst at FinnCap, said: “I think there is always scepticism when you have a company delisted, tarted up with acquisitions and offered back to investors. Why couldn’t it have been done for investor benefit rather than private equity? It always seems the public are expected to be the last at the trough.”
Mr Syed said that Vista was “immensely confident” that it will succeed with the float despite a slowdown in the IPO market in London, which has slumped to 26 per cent of last year’s levels, according to Dealogic.
John Hughes, the former Telecity chairman, has been named in the same role at Misys.
Mr Syed said there is a “tremendous opportunity” in the banking software market with its 2,000 customers fighting off smaller rivals and dealing with increasing amounts of regulation. He pointed to annual license revenue growth of 13 per cent since the Vista takeover as proof that banks are spending on software again.
Goldman Sachs, BofA Merrill Lynch and JPMorgan Cazenove are co-ordinating the float. Moelis is acting as financial adviser.
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