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Silver Lake and Warburg sell IDC for $5.2bn

The exit will generate a cash on cash return of more than 2.5 times for the two private equity firms.

Silver Lake Management and Warburg Pincus have agreed to sell Interactive Data Corporation (IDC) to Intercontinental Exchange for $5.2 billion, according to a statement.

Intercontinental Exchange has agreed to acquire the Massachusetts financial data provider with $3.6 billion in cash and $1.5 billion of ICE common stock, or 6.5 million shares.

Silver Lake and Warburg Pincus acquired IDC five years ago for roughly $3.4 billion, investing $1.4 billion of equity together in the deal at an acquisition multiple of 6.8 times trailing annual EBITDA, according to Moody’s Investors Service.

Mike Bingle, managing partner of Silver Lake, and Warburg Pincus managing director Jim Neary, said in a joint statement that since the firms’ investment in 2010, “the company has laid the foundation for long-term growth.”

As a result of the deal, the pair of private equity firms will generate a cash on cash return of more than 2.5 times and an internal rate of return exceeding 20 percent, according to a source familiar with the transaction.

The company registered to go public earlier this year, seeking to raise $100 million, according to its filing with the Securities & Exchange Commission.

According to the SEC filing, Silver Lake owns a 40.7 percent interest in IDC through its $9.3 billion, 2009-vintage third fund, while Warburg Pincus holds 36.6 percent of the company’s shares through its 2007-vintage, $15 billion Warburg Pincus Private Equity X fund.

IDC’s revenues totalled $945 million over the last 12 months and its EBITDA totalled $378 million for the same period.

The sale comes one week after Silver Lake teamed up with Michael S. Dell and his family office MSD Partners to acquire EMC for about $67 billion.

Warburg Pincus is currently in market, seeking to close on $12 billion for its twelfth fund. The Washington State Investment Board committed $750 million to the new fund earlier this year, according to PEI Research & Analytics.