TA Associates makes 4x in a year selling to DIFC

TA Associates has made a four times return from the sale of SmartStream Technologies to Middle Eastern firm DIFC Investments after deciding against an initial public offering.

Middle Eastern investment firm DIFC Investments has bought UK financial software business SmartStream Technologies from global mid-market firm TA Associates for around £200 million (€284 million; $412 million). A city source said TA Associates had made a four times return.

TA Associates bought an 80 to 90 percent stake in the company from 3i last year in September. Terms were undisclosed, but the source said TA Associates paid around £80 million at the time of the deal. TA Associates postponed an IPO in October due to lack of demand.

DIFC is the investment arm of the Dubai International Finance Centre which is the 110-acre free zone of the financial centre of Dubai. DIFC owns the Dubai Bourse, it also owns stakes in German bank Deutsche Bank and European financial exchange Euronext.

SmartStream develops transaction software used in the back and middle offices of many banks, asset managers, hedge funds and money managers. SmartStream had revenues of £46.5 million to June and an EBITDA of £13.9 million.

DIFC Investments said in a statement it aims to create a generation of hosted information and trade processing services and that SmartStream would be at the “heart” of this platform it is building.

Ajit Nedungadi, managing director of TA Associates, said: “We were not looking to sell the company at the moment but were laying the ground for a public offering. However, due to a proactive approach from DIFC and with challenging public markets we decided to sell.”

Nedungadi said at the time of the acquisition his firm realised the financial technology sector would become more interesting for its customers. He also said the firm had carried out an effective management transition bringing in chief executive Ken Archer and chief financial officer Andy Balchin.

The deal is expected to close in one month.

Deutsche Bank advised DIFC and UK investment bank Close Brothers advised SmartStream and TA Associates.