SoftwareONE Gets Cash Infusion for Growth

One of Microsoft's remaining handful of U.S.-based Licensing Solution Providers (LSPs), SoftwareONE, this week announced an infusion of growth capital from global investment firm KKR in exchange for a 25 percent minority stake. The amount was not disclosed.

SoftwareONE, which does business in 115 countries and is based in Stans, Switzerland, with U.S. headquarters in Waukesha, Wis., provides software licensing and procurement services for more than 9,000 software publishers. The privately owned company has been a longstanding Microsoft LSP, a category of partners formerly known as Large Account Resellers or LARs, and listed Microsoft first among the software publishers it works with in a statement about the deal.

The once-lucrative LAR business has come under pressure both from shrinking payouts by Microsoft and from the industry shifts away from software licenses to cloud services. SoftwareONE, like many of its competitors, now defines itself as a technology consulting and cloud services company, in addition to the licensing-related services.

"The software industry is changing, and together with KKR, we see a unique opportunity to capitalize on those changes and continue to increase the value we bring to our customers, in particular in the areas of cloud and value-added services," said SoftwareONE CEO Patrick Winter in a statement, after making clear that the company would continue "serving our customers and supporting our software publisher partners all around the world."

New York-based KKR's investment will come primarily from the KKR European Fund IV, and the transaction is expected to close this fall. KKR, best known for the landmark 1989 leveraged buyout of RJR Nabisco and the 2007 TXU buyout, said in the statement that the investment company sees promise in SoftwareONE's complete lifecycle expertise and that the investment is intended to spur further organic expansion and M&A, with a particular focus on growth in the United States and Asia.

Although Microsoft is steering LSPs in different and often painful directions with its incentives changes, Microsoft publicly recognized SoftwareONE's ongoing importance to its strategic aims with three global awards this year. SoftwareONE was a finalist for the global Volume Licensing Competency Partner of the Year Award, as well as a Country Partner of the Year Award winner for both Honduras and Singapore.

SoftwareONE had been aggressively pursuing growth in the months leading up to the KKR investment. While the company has been quiet in public about its moves, the company bought the software business of fellow LSP CompuCom in March and has reportedly been in talks with other LSPs.

Keep an eye on the LSP market as the new KKR cash comes to SoftwareONE.

Posted by Scott Bekker on August 19, 2015