Abu Dhabi, Canada groups new investors in $16.5bn IFS deal

13/04/2025 06:47 AST

Private equity company EQT has sold a ?3 billion ($3.3 billion) stake in IFS - a leading provider of cloud enterprise software and Industrial artificial intelligence (AI) applications - thus bringing in the Abu Dhabi Investment Authority (ADIA) and Canada Pension Plan Investment Board (CPPIB) as new investors.

Announcing this, IFS said it has achieved a valuation of over ?15 billion ($16.5 billion) following a significant pivot to AI-driven growth.

The valuation comes as Hg increases its stake to become a co-control shareholder alongside EQT, with TA Associates remaining as minority shareholder.

Hg and the new investors (a wholly-owned subsidiary of ADIA and CPP Investments) are acquiring shares in IFS from EQT, which is selling through its EQT VIII and EQT IX funds, as well as from TA and other minority investors.

Demand for IFS's industrial AI capabilities has increased significantly over the past 12 months as organizations across its focus industries of Aerospace & Defence, Engineering & Construction, Energy & Utilities, Manufacturing, Telco and Service, continue to realise the rapid and transformative value that IFS.ai delivers.

IFS will continue to expand its capabilities with the industrial application of generative and agentic AI, so that customers can automate workflows, improve efficiency and deliver amazing moments of service to their own customers, said the statement.

In total about ?3 billion of new money will go into IFS, according to a person familiar with the matter. EQT will sell down some of its stake as part of the transaction and investor TA Associates will also remain a shareholder.

Over the past year, IFS added 350 new customers including Exelon who adopted IFS to streamline asset maintenance across its energy grid, Rolls-Royce who is using IFS to transform service delivery of its Power Systems business, and Total Energies who is deploying IFS as the single platform for management and servicing of its global operated asset portfolio.

Moreover, an increasing number of large businesses are moving to IFS which is reflected in the average deal size of IFS's largest customers increasing by 64% year-on-year.

CEO Mark Moffat said: "IFS's success and sustained growth is centred around a commitment and track record of rapidly delivering business value to our customers. We have a differentiated proposition that continues to drive momentum in the industrial setting, specifically with the agentic and generative capabilities of IFS.ai, which enables us to be the technology of choice for the businesses that service, power and protect our planet."

"The investment and continued commitment from Hg, EQT and TA will help IFS further accelerate our journey to be the undisputed category leader of Industrial Software," stated Moffat.

Johannes Reichel, Partner and Co-Head of Technology in the EQT Private Equity advisory team, said: "EQT's relationship with IFS started in 2015 and it has been remarkable to see the company's growth since then. Starting as a software vendor focused on Northern Europe, IFS has become a global provider of enterprise solutions while embracing the power of AI for the benefit of its industrial clients."

"It's a prime example of EQT's ability to "run with the winners", where we partner with management teams over the long-term to scale regional players into global champions. We are excited to work alongside Hg to continue supporting IFS through this next phase," he noted.

Nic Humphries, Senior Partner and Head of the Saturn funds at Hg, said: "With 20 years' experience investing in software, we recognise exceptional businesses when we see them. Our increased investment in IFS reflects our conviction in their long-term vision and strong execution, which enables their customers' digital transformation."

Jonathan Wulkan, Partner at Hg, said: "Since our initial partnership in 2022 alongside EQT, Mark and the team have not only delivered impressive and consistent growth but have emerged as a global leader in Industrial AI - translating the promise of AI into practical solutions that drive efficiency and sustainability for essential industries, with significant potential for continued growth."

Naveen Wadhera, Managing Director at TA, said: "IFS's exceptional leadership, strong execution, and transformative AI capabilities are redefining what's possible in enterprise software. We remain confident in the company's vision and are excited to be part of its continued journey."

According to IFS, the transaction follows many successful years of growth for the group, delivering more than ?1 billion in ARR (annual recurring revenue) last year.

Total revenue for 2024 was over ?1.2 billion, with some of the world's largest industrial companies choosing IFS over legacy vendors.

For the transaction. IFS and selling shareholders were advised by Arma Partners and White & Case, EQT by Evercore, and Hg by Morgan Stanley & Co. and Skadden.

Arab News