Apax seeks $3 bln sale of healthcare IT firm TriZetto

Target: TriZetto Corp

Price: As much as $3 billion

Sponsor: Apax Partners LLP

Financial Adviser: JPMorgan Chase & Co

London-based Apax has hired investment bank JPMorgan Chase & Co to run an auction for TriZetto, a software vendor to the U.S. health insurance industry, the people told sister news service Reuters. TriZetto will target other companies in its sector as potential buyers, such as information technology consulting company Cognizant Technology Solutions Corp, although private equity firms are also expected to weigh offers, some of the people added.

TriZetto had 12-month EBITDA of more than $190 million as of June 30, one of the sources added.

The sources asked not to be named because the matter is not public. Apax and TriZetto declined to comment while JPMorgan and Cognizant representatives did not immediately respond to requests for comment.

TriZetto provides information technology systems, including care management and the administration of benefits, to the healthcare industry. The company says it reaches 245,000 healthcare providers, representing more than half of the insured population in the United States. Apax took the Englewood, Colorado-based company private in 2008 for $1.4 billion.

Uncertainty over the impact of healthcare exchanges on payors weighed on TriZetto in the run-up to U.S. President Barack Obama’s healthcare reforms, though it has since improved both cash flow and margins. Moody’s Investors Service Inc upgraded TriZetto’s credit rating in June, citing operational improvements, cost management and strong perpetual license revenue. The company had 12-month revenue of $682 million to the end of March, Moody’s added.

TriZetto is the latest in a string of companies serving the U.S. health insurance industry to hit the auction block, hoping for a high valuation at a time when payors and providers of healthcare seek new technologies to cut costs.

In March, private equity firms Silver Lake Partners LP and BC Partners Ltd sold health insurance claims processor MultiPlan Inc for $4.4 billion to a consortium led by Maurice “Hank” Greenberg’s buyout firm Starr Investment Holdings LLC. Greenberg is the former chairman and CEO of American International Group Inc.

The Blackstone Group LP, the world’s largest private equity firm, bought healthcare information technology company Emdeon Inc for $3 billion in 2011.

Greg Roumeliotis and Soyoung Kim are correspondents for Reuters in New York. Additional reporting by Olivia Oran.