General Atlantic exits debut German PIPE deal

The US venture capital firm has sold its 26 per cent stake in Munich-based IXOS Software following the sale of the company to Canadian group Open Text Corporation.

General Atlantic Partners, the global private equity firm investing exclusively in information technology, process outsourcing and communications deals, has sold its stake in IXOS Software, the German-listed software group.

General Atlantic became the largest shareholder in IXOS in August 2002, acquiring a near 26 per cent stake in the business listed on the Neuer Markt of the Frankfurt Stock Exchange. The stake was acquired through the purchase of existing shares from Färber and Strack-Zimmermann, the company’s founding families, and the issue of new shares.

The acquisition was a rare example of a PIPE (private investment in public equity) transaction in Europe and was the first completed in Germany. Earlier this year General Atlantic invested in UK-quoted company iSoft, paying £34m for a stake in the supplier of software applications for the health sector.

General Atlantic can sell its shares in IXOS at a cash value of E9.00 per share. Alternatively, it can exchange them at a premium for shares in Open Text. The offer values the equity of IXOS Software AG at approximately E199m based on the cash offer and  E223m based on the alternative offer.

The deal provides a healthy return on investment for General Atlantic Partners, which paid E5.90 per share for its stake in the business. A spokesperson said the firm was unable to comment on the transaction due to regulatory requirements.

General Atlantic was advised on both the acquisition and subsequent sale of its stake in IXOS by law firm Freshfields Bruckhaus Deringer.

“The structure of this transaction for the first time will allow shareholders to choose between a pure cash offer and shares of the bidder,” said Freshfields Bruckhaus Deringer partner Ferdinand Fromholzer. “This gives shareholders the opportunity to stay invested in the company while at the same time, accepting the offer.”