Carlyle Eyes 4x Return On Software Vendor

Target: UC4 Software

Price: $271.7 million

Sponsor: EQT Partners

Seller: The Carlyle Group

Such a return would be exceptional for Carlyle (or any firm, for that matter), whose co-founder David Rubenstein recently said investors in private equity funds have lowered their return expectations.

UC4, with offices in Europe, the U.S. and Australia, boasts that it is “the world’s largest, independent” provider of software that helps large organizations manage complex information technology systems. Its diverse client base has included restaurant chain Cracker Barrel, car maker American Suzuki Motor Co. and financial services firm Julius Baer, among others.

Stockholm-based EQT Partners announced on Aug. 13 it was buying the company in a deal valued at $271.73 million. The deal is expected to close in the fourth quarter.

Carlyle bought the UC4 in 2006 for an undisclosed amount via Carlyle Europe Technology Partners LP, which is earmarked for European technology companies. The growth capital and buyout fund was launched in 2005 and raised a total of €222 million ($273.7 million today).

The Washington, D.C.-based firm then pursued a roll-up strategy, with UC4 closing at least three acquisitions from May 2007 through December 2011, according to Capital IQ. UC4’s revenue more than tripled from €20 million in 2006 to more than €60 million in 2012, according to the source.

The return must be welcome news for Rubenstein, who reportedly said in an earnings call earlier this month that pensions and other investors in private equity funds have lower return expectations today than they have in 30 years. Where investors used to expect internal rates of return of 20 percent, today they’re happy with returns in the mid-teens, which he said is still better than alternative asset classes, Fortune reported.

Carlyle’s most recently closed flagship North American buyout fund, Carlyle Partners V LP has generated an IRR of 9.2 percent and an investment multiple of 1.25x as of Dec. 31, 2011 for the New York City Employees Retirement System, which committed $70 million to the investment vehicle. More than $44 million of that had been drawn down as of that date.

Executives with EQT Partners were not immediately available for comment.