Iress is back on the radar again with respect to a private equity buyout, with suggestions New York-based Blackstone has been running the ruler over the $1.7bn Australian listed technology company in recent weeks.
Shares have rallied about 9 per cent in the past two days and almost 12 per cent over the past week, fuelling questions as to whether some activity could be afoot.
It is understood various parties have a running file on Iress, including the Jarden-advised Thoma Bravo, while EQT has made efforts to buy the business in the past — and keeps an open file on — Iress and Bain Capital has been active in the space.
Kohlberg Kravis Roberts has also been an active buyer of Australian technology companies.
Technology is considered one of the key areas of investment for Blackstone, which is also lining up in the final round of the contest for the $5bn data centre operator AirTrunk.
The understanding is there is no party currently in detailed discussions to buy Iress, but there have been approaches over recent weeks.
The rally is being attributed to heightened interest in the sector since Bain Capital agreed to buy Envestnet for $US4.5bn last week.
Envestnet is an American financial technology corporation which develops and distributes wealth management software and products to financial advisors and institutions.
The company’s main product is an advisory platform which integrates services and software used by financial advisors in wealth management.
It is similar to Iress in that Iress provides software and services for trading and market data, financial advice, investment management, mortgages, superannuation, life and pensions and data intelligence.
Iress has at least 65 per cent of the Australian wealth advice market, while Envestnet has about 30 per cent in the United States.
Envestnet was offered $US85 per share a number of years back but this deal was agreed at $US63.15 per share after it was unable to execute on its plan to deploy technology for its tech-refresh plan.
Private equity firms globally have identified a growing demand for wealth management advice.
EQT bid $3.1bn for Iress, or $15.91 per share, in 2021 but walked away after carrying out due diligence.
The Iress share price is now around $9.22 per share.
Shares crashed almost a year ago by 36 per cent, when it delivered a disappointing result for the 2023 financial year, to $6.44 and suspended dividends.
Iress counts Goldman Sachs as its defence adviser.
Buyout funds are thought to be attracted to Iress for its high cash flow, defensive revenue and what have been underperforming assets, but the company’s management is said to be focused on improving performance.
Should Blackstone or another private equity firm move on Iress, as it has been anticipated for some time, it will continue the trend of buyouts of Australian listed companies by private equity firms.
According to a mergers and acquisitions survey out this week from Deloitte, 76 per cent of M&A industry leaders believe current economic conditions support deal activity, compared to 66 per cent last year, while 53 per cent expect more deals in the next year, up from 45 per cent in 2023.
Iress and Blackstone declined to comment on the speculation.
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