SunGard IPO: in a "year or two... three or four..."
Our private equity partners are patient, said the CEO before the split
Now that the SunGard Data Systems/Sungard AS split is official, when will KKR, SilverLake and the other big private-equity firms that paid $11.4 billion for the Wayne software conglomerate back before the recession get paid? Excerpt from SunGard's transcript of its February conference call:
Guy Baron, RBC Capital Markets: "Hi, good morning. I just had a few clarifications here, actually. So just first off, I understand in terms of the spin and the tax treatment you are relying on outside opinions. And what I'm sort of wondering is, is there a definitive time frame during which you need to pursue an IPO or a sale of either entity, post-spin, in order to qualify for the tax status or is that really an open-ended time frame?"
Russell Fradin, SunGard Data CEO: "No, it's the latter, meaning part of why we're doing what we're doing is let all of the seeds, as I said before, germinate in their time, meaning this really gives us complete flexibility in terms of when we choose to do an IPO on either side of the equation. So you are reading that exactly right, that there's a huge benefit in being able to have that flexibility."
(In a previous version of this item I excerpted the above remarks, hoping to make them clearer. SunGard complained the way I did it could leave readers with an inaccurate view. I have replaced it with the full exchange. Joe D.)
Baron also asked - "from a sense of an ownership kind of perspective" - how patient are those private-equity firms feeling?
"I asked them exactly the question," Fradin said. "...And the answer was absolutely universal and universally positive and supportive of making sure that the company is in great shape when a transition ownership" takes over, "that everyone is proud of the story," and sales and profits are hearing back up again.
"I have just been incredibly pleased of how supportive the Board and the sponors have been," Fradin added. "If it takes another year or two, great. If it takes another three or four, they're willing to do that."