(Bloomberg) -- GTCR has agreed to acquire a minority stake in Tricentis in a deal that values the software-testing company at $4.5 billion including debt, the firms said Tuesday.
The Chicago-based firm is investing $1.33 billion of equity as part of the transaction, executives said in an interview.
In 2017, Insight Partners led a funding round for Austin-based Tricentis, led by Chief Executive Officer Kevin Thompson. The company was founded in 2007 in Vienna Austria and provides software to companies that are building or deploying applications that aims to ensure the applications operate as expected.
The company, which generated around $30 million in revenue when Insight first invested, is set to hit about $400 million in annual revenue by the end of 2024 and projected to reach $500 million by the end of 2025, Thompson said in an interview.
“Software testing capabilities are increasingly becoming a critical area of development and resourcing for all businesses, tailwinds which will serve this business going forward, Nelson Iginla, principal at GTCR, said in a statement.
Insight’s Thomas Krane said while Tricentis has pursued organic growth, it has also made around a dozen tuck-in acquisitions of companies including QASymphony, Neotys and SeaLights. Insight and GTCR together own over 50% of Tricentis and will jointly control the company, Krane said.
The majority of the $1.33 billion will be paid out via a dividend to Tricentis shareholders including founders Wolfgang Platz and Franz Fuchsberger, Insight, as well as current and former employees.
Tricentis is profitable and sees itself as the dominant player in a roughly $50 billion market, Thompson said. The company may consider going public in coming years, but hasn’t made any final decisions, he added.
Evercore Inc. advised the company on the deal, along with JPMorgan Chase & Co. and Bank of America Corp.
--With assistance from Liana Baker.
©2024 Bloomberg L.P.