(Reuters) - KKR & Co LP (KKR.N) said on Tuesday it will acquire U.S. business software company BMC Software in a deal which sources valued at $8.5 billion, including debt, making it the buyout firm’s largest acquisition since the 2008 financial crisis.
The size of the deal underscores how private equity firms are turning to bigger leveraged buyouts as they seek to put a record $1 trillion of unused investor money to work. Private equity firms are paid management and performance fees only on investor capital that is deployed on deals.
KKR has also partnered with U.S. hospital operator HCA Healthcare Inc (HCA.N) to make an offer for U.S. physician services provider Envision Healthcare Corp (EVHC.N) which has a value including debt of close to $10 billion, Reuters reported earlier this month.
KKR agreed to buy BMC from private equity firms Bain Capital and Golden Gate Capital, which acquired BMC in 2013 for $6.9 billion.
Representatives for KKR, Bain and Golden Gate declined to comment on the purchase price, which was disclosed by sources on condition of anonymity.
The acquisition of BMC, which provides software that helps companies organise their tech support functions, comes as software companies are reorienting themselves to focus on higher-margin businesses such as cloud computing, cyber security and data analytics to counter a slowdown in their legacy businesses.
KKR has invested about $26 billion in the technology sector over the past decade, and BMC will join a portfolio that includes Mitchell, Epicor and Calabrio - all firms that make software used by businesses.
KKR expects to use BMC as a platform to make further acquisitions, a person familiar with the strategy said. Making bolt-on purchases is an increasingly common strategy for private equity firms to increase scale and pricing power in their markets.
Credit Suisse, Goldman Sachs, Jefferies, Macquarie and Mizuho Bank provided financing for the acquisition.
Goldman Sachs, Credit Suisse and Morgan Stanley were BMC’s financial advisers, while Macquarie Capital advised KKR.
The acquisition is expected to close in the third quarter of 2018.
Reporting by Joshua Franklin in New York and Aparajita Saxena in Bengaluru; Editing by Sai Sachin Ravikumar and Phil Berlowitz