KKR has agreed to make a “significant investment” in OneStream Software that values the company at more than $1 billion, with The Wall Street Journal reporting the firm will shell out over $500 million in the deal and take a majority stake. The move represents the first outside investment in OneStream, a creator of software designed to simplify finances and other operations for large and mid-sized corporations.
Interestingly enough, the company counts The Carlyle Group—one of KKR’s primary rivals—among its clientele. Retired US Army general David Petraeus will be among a trio of new KKR representatives on the OneStream board.
Founded in 2010 and based just north of Detroit, OneStream claims to have achieved growth of nearly 500% over the past three years. It’s the prospect of numbers like that on the balance sheet that has increasingly drawn private equity firms like KKR into the software sector. In the case of the publicly traded buyout giant, that took the form of a very steady rise during the first half of this decade: Between 2012 and 2016, KKR increased its quantity of software deals all the way from two to 23, per the PitchBook Platform.
That figure actually declined sharply the past two years, all the way to eight deals in 2018. But perhaps KKR was just focusing on quality over quantity: Last year saw the firm complete its $8.3 billion takeover of BMC Software, a provider of digital conversion services and other IT offerings, far and away its largest software investment so far this decade.
Financial software companies like OneStream have become popular targets across all of PE. Refinitiv and Verifone are two other companies in the space to sell for a billion or more in the past six months, with both of those companies topping the $3 billion mark.
In additions to majority deals, KKR has shown an increasing proclivity for taking minority software stakes often targeting already-valuable startups in late-stage rounds. Last October, for instance, the firm participated in a $1.25 billion investment in Epic Games, the maker of “Fortnite,” valuing the company at a whopping $15 billion. KKR became a backer of FanDuel during the height of the daily fantasy sports craze. Its venture portfolio also includes companies like cybersecurity specialists Cylance and Darktrace, as well as Southeast Asian ridehailing power Go-Jek.
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