Exclusive: Silver Lake explores sale of IPC Systems - sources

Reuters News
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Posted: Oct 02, 2014 5:53 PM

By Soyoung Kim and Greg Roumeliotis

NEW YORK (Reuters) - Private equity firm Silver Lake Partners LP is looking to sell IPC Systems Inc, a provider of communication systems for Wall Street traders, to exit one of its longest-held investments, according to people familiar with the matter.

Silver Lake, which acquired IPC from Goldman Sachs Group Inc's <GS.N> private equity arm in 2006 for $800 million, has hired Goldman and Evercore Partners Inc <EVR.N> to run an auction for the company, the people said this week.

IPC has annual earnings before interest, taxes, depreciation and amortization of close to $160 million and could be valued at more than $1.4 billion in a sale, including debt, the people added.

The sources asked not to be identified because the sale process is not public. Silver Lake, IPC, Goldman Sachs and Evercore declined to comment.

Based in Jersey City, New Jersey, IPC makes specialized telephony systems for financial institutions ranging from investment banks to hedge funds. It is present in 5,000 customer sites in more than 60 countries, according to its website.

IPC's market for trading turret systems has limited growth prospects in the near-to-intermediate term, Moody's Investors Services Inc said in April.

Moody's added that it expected IPC's business risk to increase as the company seeks faster growth in sales of data and network services to financial services customers. These services are highly commoditized and IPC's competitors in this area have significantly larger scale and resources, Moody's said.

In August, IPC announced it had named Neil Barua, a Silver Lake operating partner and interim chief executive of IPC since February, as its permanent CEO. Barua was previously an operating adviser at private equity firm Francisco Partners.

Private equity funds typically hold companies three to seven years, making Silver Lake's ownership of IPC for more than eight years atypical.

Silver Lake has also been looking to exit another financial technology company this year, high-frequency trading firm Virtu Financial Inc.

Virtu postponed an initial public offering indefinitely in April following the release of Michael Lewis's book "Flash Boys: A Wall Street Revolt" and the subsequent public and regulatory scrutiny of high-frequency trading.

(Reporting by Soyoung Kim and Greg Roumeliotis in New York; Editing by Steve Orlofsky)