Three of the world’s most powerful investors are in talks to buy a stake in IFS, a €15bn (£12.51bn) software developer which has positioned itself in the vanguard of the industrial shift towards artificial intelligence (AI).
Sky News has learnt that the Abu Dhabi Investment Authority (ADIA), Singaporean state investor Temasek Holdings and Canada Pension Plan Investment Board (CPPIB) are in advanced negotiations to acquire shares in IFS, which has its operational headquarters in London.
City sources said on Tuesday that a deal was close to being finalised, with an announcement likely to be made early next month.
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As part of the secondary share sale – which will not involve new stock being issued – IFS’s trio of private equity backers will shuffle their holdings in the company.
Swedish-based EQT Partners, which took IFS private in 2016, and TA Associates are understood to be reducing their holdings in IFS, while Hg Capital intends to increase its stake by acquiring additional shares, the City insiders added.
The deal values IFS at approximately €15bn, in line with earlier reports, they said.
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Arma Partners, the technology-focused investment bank, is advising on the transaction.
The recruitment of prominent investors such as ADIA and CPPIB underlines the increasing value attached to software providers which boast large recurring revenues and which are at the forefront of the seismic shift towards AI which remains in its infancy.
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A provider of software to customers in sectors such as energy and aviation, IFS describes itself as “the world’s leading provider of Industrial AI and enterprise software for hardcore businesses that service, power and protect our planet”.
It publicly names its clients as including Comcast, the ultimate owner of Sky News, energy giant EOn, Homeserve, Molson Coors and Rolls Royce Power Systems.
Last year, it boasted annual recurring revenues of more than €1bn, and is said to be taking market share from legacy software suppliers such as IBM, Oracle and SAP.
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Announcing its financial results for last year, Mark Moffat, IFS’s chief executive, said: “IFS is leading the Industrial AI revolution, evidenced by our sustained financial performance that is fueled by customer demand for IFS.ai.
“No other vendor understands our customers’ industries as well as IFS, which simply means that our customers are realizing exceptional value from IFS.ai.
“We continue to outperform monolithic, legacy enterprise software vendors who have not kept up with the pace of change.”
IFS has grown from humble beginnings in 1983, when it was founded by five university friends who pitched a tent outside its first customer’s premises to ensure they would be available around the clock.
IFS declined to comment, while none of the investors contacted by Sky News would comment.
