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Buyout firms to snatch insurance software provider for $2.7 billion

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(Reuters) — Buyout firms Bain Capital L.L.C and Vista Equity Partners Management L.L.C. said on Monday they agreed to acquire Vertafore Inc., in a deal that sources said values the U.S. insurance software provider at about $2.7 billion, including debt.

The deal shows how the insurance software sector’s strong cash flow has made it popular with private equity firms.

Bain and Vista are buying Vertafore from private equity firm TPG Capital L.P., which Reuters reported earlier this month had hired Bank of America Corp to explore a sale of the company.

TPG had acquired Vertafore in 2010 from buyout firms Hellman & Friedman L.L.C. and JMI Equity for $1.4 billion.

The private equity firms said in a statement on Monday that the transaction is expected to close during the third quarter. They did not disclose the deal price, which sources who requested anonymity said was $2.7 billion.

Based in Bothell, Washington, Vertafore provides software to property and casualty insurance carriers that helps process claims. Its products are used by more than more than 500,000 insurance professionals, according to its website.

Insurance software companies have seen rising demand for their products that give customers instant access to their information and help insurance providers cut costs.

That growth has made them targets for private equity, with Hellman & Friedman, for example, acquiring Applied Systems, a Vertafore competitor, from Bain in 2014 for $1.8 billion.

Credit Suisse Group A.G. is providing the financing commitments and is acting as financial advisor to Bain and Vista on the Vertafore deal.