Exclusive-Francisco Partners, KKR to buy minority stakes in Italy's TeamSystem, sources say

By Elvira Pollina and Amy-Jo Crowley

MILAN/LONDON, Sept 11 (Reuters) - Private equity firms Francisco Partners and KKR have agreed terms to buy minority stakes in Italian software company TeamSystem from its main investor Hellman & Friedman, three people familiar with the matter said.

H&F agreed to sell a stake of around 10% in TeamSystem to Francisco Partners, while a further roughly 5% stake was sold to other investors including KKR, the sources said. 

The deal values TeamSystem, which provides accounting, payroll and business management software to companies and professionals, at between €8 billion and €10 billion ($9.27 billion to $11.59 billion), two of the people said.

The deal comes after a steep selloff in software stocks this year, partly driven by concerns about AI's impact on the sector. Those fears have weighed heavily on valuations and threatened to derail transactions across the industry.

Against that backdrop, the transaction is an encouraging sign for private equity firms with significant exposure to software assets in their portfolios.

The transaction allows H&F to cash in part of its investment while transferring its remaining stake to another fund managed by the private equity firm, two people and another separate source said. All the people spoke on condition of anonymity because the terms are private. 

H&F, Francisco Partners, KKR and TeamSystem all declined to comment. 

It also demonstrates the ability of H&F to reduce its stake in a major holding through a so-called private IPO process, enabling it to return capital to investors at a time when sponsors have struggled to bring their largest portfolio companies to the public markets.

BET ON BUSINESS SOFTWARE

One of the people said TeamSystem products are closely integrated with government e-invoicing systems used by small and medium sized enterprises, making its products harder for AI-driven competitors to replicate. 

H&F, which first invested in TeamSystem in 2016, held a 69% stake in the company as of July, according to a corporate filing. The same filing showed that Silver Lake and Abu Dhabi sovereign wealth fund ADIA, which acquired stakes in TeamSystem from H&F in 2023, owned 12.8% and 9.8%, respectively. 

The Financial Times reported in July that the buyout firm was seeking a valuation of about €8 billion for the business.

That valuation implied a multiple of roughly 16.5 to 17 times TeamSystem's 2025 adjusted earnings before interest, taxes, depreciation and amortisation of €476 million. 

TeamSystem currently generates more than €1.3 billion in revenue and about €600 million in core earnings, according to one of the sources. When H&F first invested in the company, it generated an EBITDA of €75 million, the person added.

Elsewhere in the industry, private equity firm Silver Lake announced this week that it will merge its two French software companies, Cegid and Silae, creating a group valued at more than €10 billion.

($1 = 0.8628 euros)

(Reporting by Elvira Pollina and Amy-Jo Crowley in London, editing by Anousha Sakoui and Louise Heavens)