HGGC sees growth ahead with founder in Serena Software deal

  • Silver Lake portfolio company in enterprise software
  • Founder Doug Troxel reinvests in his company
  • Control stake marks HGGC’s first Fund II platform

Rich Lawson, CEO of HGGC, said he sees growth potential for Serena Software, a specialist in application lifecycle management, or ALM, after it rang up revenue of more than $200 million in fiscal 2013, with nearly 500 employees.

“This is a really big company — they have operations in 14 countries and we’ll help them expand,” Lawson said. “Any business grappling with technology and how to use it to be more competitive will find their products helpful.”

Lawson said Serena Software stands out as the largest independent provider of application development services for information technology operations. The firm has potential to grow both through add-on deals and through organic expansion. Lawson said it is too early to say if HGGC may float an initial public offering for Serena Software.

Serena Software founder Douglas Troxel is holding on to his 30 percent stake and plans to reinvest an additional sum in the company but will retain a minority position. He will remain on the company’s board of directors and “dedicate more time to the business,” according to the firm.

Steve Young, the former San Francisco 49ers quarterback who co-founded HGGC, and Hudson Smith, principal of HGGC, will take seats on the board of Serena Software.

HGGC disclosed a $1 billion target for HGGC Fund II in a regulatory filing last month. Lawson declined to comment on fundraising for the buyout pool.

Serena Software named Greg Hughes as CEO in January 2013. Lawson said he’s known Hughes since HGGC talked to Silver Lake about portfolio firm Hybris Software, which was sold to SAP in 2013. Hughes was at Silver Lake at the time.

Silver Lake put Serena Software up for sale last year in a deal that was expected to fetch a price of about $450 million to $500 million, according to reports by sister news service Reuters. It also embarked on two restructuring programs and reduced its work force by about 175 employees. Serena Software was valued at about $1.2 billion when Silver Lake took it private in 2006.