Koch Agrees to Invest over $2 billion in Infor

Infor, a leading provider of business applications specialized by industry and built for the cloud, today announced it has reached a definitive agreement in which Koch Equity Development LLC (“KED”), the investment and acquisition subsidiary of Koch Industries, Inc., has agreed to make an investment of more than $2 billion in the company.  The investment will provide Infor access to additional growth capital to accelerate innovation, expand distribution, and continue disrupting the enterprise applications industry.

KED’s investment is strong validation of Infor’s strategy and growth – a journey fueled by product investment, innovation, and an entrepreneurial culture. Koch Industries is an American multinational corporation that employs 100,000 people globally and is estimated by Forbes to be the second largest privately-held company in the United States with annual revenue of approximately $100 billion. The investment by KED significantly strengthens Infor’s capital base and provides an entrée into a large ecosystem of businesses contemplating digital transformation.

Infor became the first company to move mission critical industry applications to the cloud, and now counts more than 66 million users of its cloud applications. The company’s double digit revenue growth in its most recent quarter was fueled by a 130% annual increase in SaaS revenue; more than half of Infor’s software revenues are now derived from cloud applications.

Infor’s unique cloud strategy uses Amazon Web Services, enabling the company to invest in deep industry functionality with capital that would otherwise be needed to maintain its own data center infrastructure. Infor’s broad set of applications running on a hyper-scale cloud with cutting-edge data science and design provide a foundation for modernizing companies in healthcare, fashion, retail, distribution, public sector, and discrete and process manufacturing.

The Infor management team is headed by Chief Executive Officer Charles Phillips, who is leading the company into a new phase of growth, investment, and innovation.

“Koch is one of the largest private companies in the world with diversified holdings and immense resources to support the next exciting phase of growth at Infor and we are thrilled to have their support,” said Charles Phillips, CEO of Infor.  “Some of the largest companies in the world have approached Infor looking for a modern alternative to the legacy options available for mission critical business applications.  Infor has the scale and capital to provide a digital platform for the Global 5000.”

Under Phillips’ leadership, Infor invested approximately $2 billion in product design and development over the last five years and delivered more than 400 new products, 1,700 integrations, and 16,000 industry features in its CloudSuite product line. Infor now has 15,000 employees and operates in more than 170 countries. Key milestones include:

• First Industry Cloud Company – By building deep industry features directly into its applications instead of leaving that critical content to third party consultants, Infor became the first company to run mission critical applications in the cloud for healthcare, manufacturing, retail, and public sector organizations. Companies no longer want the expensive consulting engagements that were historically required to add industry enhancements to generic software products.

By putting thousands of micro-vertical industry features into the applications, all customers in that specific industry can share those features in a multitenant cloud environment.  Applications rich in industry domain lower the cost and time of deployment and make future enhancements and upgrades far easier.  By enabling mission critical processes to be managed and integrated with applications for CRM, HCM, Marketing, and more in the cloud, Infor delivers a complete CloudSuite for its target industries, which has led to significant growth and larger deal sizes.

• Dynamic Science Labs – Just off the campus of M.I.T. in Kendall Square, Infor built a data science team with more than 70 PhDs and former professors to deliver predictive analytics, machine learning, and optimization for use-cases specific to select industries.  Recent innovations around retail assortments, inventory optimization, and pricing segmentation were made possible because of Infor Dynamic Science Labs and access to data on a hyper-scale cloud with unlimited compute power.

• Creative Agency – Infor was the first enterprise applications company to build a captive creative agency in New York. The agency, dubbed Hook & Loop, focuses on user experience and design, a historical weakness for enterprise applications.  By leveraging the vast pool of design talent in Manhattan, Hook & Loop has re-defined user experience in the business application category. Infor recently launched H&L Digital, customer-facing consultancy for digital transformation projects.

• Global Commerce Network – Infor ION, a next generation middleware platform that is far simpler and more open than traditional middleware, leverages the open source Apache ESB and a simple XML-based publish-and-subscribe model using OAGIS standards. The ability to quickly integrate Infor and non-Infor applications led to ION becoming one of Infor’s fastest growing products ever.

Infor is the only business applications provider with a direct commerce network. The company’s GT Nexus network connects over 28,000 businesses, banks, logistics providers, brokers, and carriers to process transactions and enable collaboration and visibility among these trading partners.

Leadership Quotes

 “Over the last 15 years, Infor has grown from a small company to one of the most significant enterprise software companies in the world and it’s been an amazing thing to be a part of,” said Infor Board member Jim Schaper. 

“The support we are providing to Infor marks one of the largest investments KED has ever made and demonstrates the confidence we have in Infor’s technology, team and business model,” said Matt Flamini, KED’s President.

“Infor’s demonstrated capability to help companies across a wide spectrum of industries automate and improve efficiency is relevant to our broad portfolio of invested companies and we look forward to exploring co-innovation opportunities,” said Brett Watson, Senior Managing Director of KED.

“We are extremely pleased with the progress the Infor team has made in scaling and executing into the massive opportunity in enterprise technology applications,” said David Dominik, Managing Director of Golden Gate Capital, which made its first investment in Infor in 2002. “KED’s investment is a tremendous endorsement and we look forward to working together with them and supporting management as they continue delivering industry-leading software applications to a growing list of world class customers.”

“We remain a meaningful investor in Infor and will continue to support the company in the years ahead,” said Rishi Chandna, Managing Director at Golden Gate Capital.

Transaction Overview

This transaction, which is subject to customary closing conditions and regulatory approvals, is expected to close in early 2017.  The KED investment will be a combination of preferred and common equity.

Infor’s existing shareholders, including Golden Gate Capital, Summit Partners, and Management will maintain control of the company.  KED will have the right to appoint four of nine directors on the board of Infor’s parent company.

Morgan Stanley and Bank of America Merrill Lynch are serving as Infor’s lead financial advisors, and Gibson Dunn is serving as outside legal counsel.  Credit Suisse also provided financial advice to the company.  Kirkland & Ellis LLP is serving as outside legal advisor to Golden Gate and Summit Partners.  Rothschild, Inc. is serving as exclusive financial advisor to KED, and Jones Day is serving as outside legal counsel.