KKR explores sale of Australia's MYOB to ANZ

ANZ said in a filing that it has yet to reach an agreement on any deal. The group added that MYOB is a leading provider of business management, financial, and accounting solutions to small and medium-sized enterprises (SMEs), as well as enterprise and accounting practice customers, implying a strategic relevance to its core banking operation.

It was previously reported by Bloomberg that ANZ and KKR were in advanced discussions for a deal that could value MYOB at more than AUD 4bn (USD 2.7bn). The private equity firm has owned MYOB since early 2019 when it completed a take-private at a valuation of approximately AUD 2bn. It originally offered AUD 2.2bn, but the bid was revised downwards following further due diligence.

MYOB has known several private equity backers. Archer Capital and HarbourVest Partners owned the company through 2011 when it was acquired by Bain Capital for around AUD 1.3bn. Bain made several partial exits, before and after MYOB went public in 2015 at a valuation of A$2.59 billion in 2015. The private equity firm completed its exit with the arrival of KKR.

MYOB provides business management software solutions to 1.3m SMEs in Australia and New Zealand. At the time of KKR’s acquisition, 82% of revenue came from SME solutions, including accounting, payroll, and tax. Other business lines involved selling practice software to accountants and enterprise software to medium and large-scale businesses.

As of year-end 2018, there were 628,000 online subscribers and annual revenue amounted to AUD 445.2m, of which 97% was recurring revenue. Underlying EBITDA and net profit for 2018 were AUD 190m and AUD 63.8m, respectively.

MYOB published a report last month that included the results of a survey of 2,000 SMEs. Companies are collectively spending AUD 2.6bn a year on digital tools, yet 57% of respondents said they were experiencing “bad digitisation” whereby digital apps and tools were not integrating with each other or not communicating at all.

Private equity interest in Australia-based enterprise services and software-as-a-service (SaaS) providers has arguably never been higher. This includes proposed acquisitions of listed companies – processes involving Damstra Technology and Infomedia are currently underway – as well as buying and participating in growth rounds for privately-held players.

MYOB’s early success has played a role in shaping the software investment thesis. Indeed, Andrew Gray, who participated in Archer’s acquisition of MYOB, went on to establish Potentia Capital, a B2B technology-focused investor, with Tim Reed, the company’s former CEO. Potentia recently closed its second Australia and New Zealand fund on AUD 635m.

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• Topics
• Australasia
• Trade sale
• Technology
• Australia
• KKR
• enterprise software