In an all-cash transaction valued at about US$1 billion, funds advised by Apax Partners and JMI Equity said June 11 they have agreed to acquire Paradigm Ltd., an independent software vendor focused on the petroleum exploration and production sector. Paradigm is a multi-national company with chief offices in London and Amsterdam and a significant presence across Europe, the Americas, the Middle East, Africa, China, and Australasia.
Paradigm’s software is intended to optimize drilling and production decisions through the analysis of vast quantities of seismic and well-log data, spanning the entire spectrum of the E&P lifecycle from basin evaluation through to development and production.
Paradigm says it has more than 700 customers, including super-major oil companies; national oil companies; independent E&P companies; and seismic processing service firms. The market for software solutions in this sector has been growing rapidly in recent years. The company says it will continue to invest heavily in R&D given the complexity and vast processing power required to run these applications.
Eldad Weiss, Paradigm’s CEO, commented: “It is exciting for Paradigm to team up with Apax and JMI. With their backing, Paradigm is ready to further accelerate its top line and market share growth and capitalize on the opportunities its market position and leading technologies present.”
Ian Jones, a senior partner at Apax and head of the energy team, said: “Paradigm has invested considerable time and money in developing market-leading intellectual property, and employs many of the leading scientists and software engineers in the sector. As such, it is well-placed to benefit from strong tailwinds in the coming years as energy companies look to drill in more challenging locations. The software it provides is the best in the market, leading to strong, established relationships with its customers and underpinning an attractive business model.”
Jason Wright, a partner in the tech and telecom team at Apax, added: “Paradigm is known as a technologically innovative software company. Our intention is to continue this innovation and gain market share in a growing market. We believe that the intersection between energy and software is an exciting area for investment and is an opportunity we have been monitoring for some time.”
Apax has extensive experience in the software and IT space through previous investments including Epicor Software Corporation/Activant Solutions, Sophos, The TriZetto Group, RealPage, IntraLinks, Princeton Softech, Planview, and Autonomy. The firm has also invested previously in other technology companies whose growth is driven by the energy sector, including Hansen Transmissions and Q-Cells. In total, Apax funds have invested more than $1.7 billion of equity in the enterprise software sector.
Bank of America Merrill Lynch and Simmons & Co. acted as financial advisers to Apax, and Kirkland & Ellis LLP provided legal advice. UBS and Royal Bank of Canada provided debt financing. Jefferies & Company Inc. acted as adviser to Paradigm. Skadden, Arps, Slate, Meagher & Flom LLP provided legal, and PwC financial advisory services.
Apax Partners, a global private equity group, operates across the United States, Europe, and Asia and has more than 30 years of investing experience. Funds under the advice of Apax Partners total over $40 billion around the world.
JMI Equity is a growth equity firm focused on investing in growing software, internet, business services, and healthcare IT companies. Founded in 1992, JMI has invested in more than 100 businesses in its target markets and has over $2.1 billion of committed capital under management. JMI provides capital for growth, recapitalizations, acquisitions and buyouts. One of its investments is Seismic Micro-Technology (SMT), which also operates in the oil and gas space.
Paradigm specializes in digital subsurface asset management and software innovation. Its analytical and information management solutions extend across the most critical exploration and production disciplines from seismic processing and imaging, interpretation, modeling to reservoir characterization, and well planning and drilling. The company was founded in 1987 and operates globally through 30 customer service and technology facilities located in 25 countries.