With New $875M Fund, JMI Equity Maintains Focused Strategy on Software Deals

12/23/10Follow @bvbigelow

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the firm can add value, which usually means investing capital. But that can extend to tapping its contacts throughout the software industry to recruit CEOs and other key leaders.

“The growth equity market is very attractive because it affords you the ability to take out start-up risk,” Barber says. “We work to find entrepreneurs with proven businesses, established customers and recurring revenue. We try to eliminate market- and product-risk and instead take on team- and business-building risk.”

The managing general partner hinted that JMI also would prefer to establish its own identity, especially in San Diego, where JMI is often associated with Moores, who made his fortune as the founding CEO and chairman of Houston’s BMC Software. Moores emerged as a local power broker when he moved to build a new downtown ballpark after buying the San Diego Padres baseball team in 1994. Moores also came under fire for selling his majority stake in San Diego’s Peregrine Systems in the years before a corporate accounting scandal engulfed the publicly traded software company.

As The Baltimore Sun observed in 1993, JMI Equity was the result of Moores’ ties with Alex. Brown & Sons, the Baltimore-based investment bank (acquired by Bankers Trust in 1997). Charlie Noell, a managing director at Alex. Brown who helped take BMC public in 1988, and Gruner, who worked with Noell in the firm’s technology group, co-founded JMI in 1992.

Barber also was a managing director at Alex. Brown, and headed the firm’s software investment banking practice before he joined JMI in 1998.

In the 18 years since JMI was founded, Barber says the firm has raised $2.1 billion and invested in more than 100 companies. It has had 55 liquidity events (16 IPOs and 39 acquisitions), with 35 companies remaining in its portfolio. Of the 39 M&A deals involving JMI portfolio companies, four were sold in 2010: CA acquired Nimsoft for $350 million; IBM acquired Unica for about $480 million; Hexagon acquired Intergraph for more than $2.1 billion; and TPG Capital acquired Vertafore for $1.2 billion.

JMI’s biggest deal came in 2008 with Google’s $3.1 billion buyout of DoubleClick, the New York digital marketing company. It came just … Next Page »

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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