JDA Software Group has announced that it has completed an agreement with funds managed by Blackstone and New Mountain Capital (NMC) to effect a recapitalization of the company through a $570 million equity investment.
The new capital will be used to fuel JDA’s product development and growth plans for its portfolio of supply chain and omni-channel retail solutions. The new equity investment is expected to be completed by early Q4 2016.
“This is a very exciting day for JDA and a testament to the terrific work of our associates and our 4,000 loyal global customers,” said Bal Dail, chairman and chief executive officer, JDA. “This investment will accelerate our future growth plans and vision for the business. This investment will accelerate the development of our SaaS-based solutions and allow us to develop innovative new solutions on Google Cloud Platform while enhancing our current large R&D investment in our existing products.”
The new equity investment will have no cash interest costs for JDA and will be used to retire existing debt and reduce JDA’s interest expense by $70 million per year. The remaining debt will have no operating covenants and the first maturity will not be until the end of 2023. NMC, which has been the company’s majority shareholder since JDA’s merger with RedPrairie in 2012, will be investing in the equity alongside Blackstone, and will remain as the company’s majority shareholder post-investment.
“We are thrilled to partner with New Mountain Capital to make this strategic investment in JDA,” said Viral Patel, managing director at Blackstone. “We are confident that the company is primed for accelerating growth in the years ahead.”
JDA closed the first half of 2016 with its highest year-over-year growth in software revenue since NMC merged the company with RedPrairie in 2012. In the second quarter of 2016, JDA posted overall revenue growth of 7% versus the prior year (8% in constant currency), with software revenue growth of 62% and 44% growth in Software-as-a-Service (SaaS) revenue.
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