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The Swedish investment firm EQT stands behind the $9 billion offering

Frankfurt-based SUSE is targeting a pre-summer initial public offering valued at 7-8 billion euros ($8.3-9.5 billion), according to Reuters. Quoting sources close to the deal, Reuters reports that SUSE’s owner, buyout group EQT, has stepped up preparations for the deal and chosen a syndicate of banks to organise the deal. The IPO is expected to kick off in May.

Bank of America and Morgan Stanley will execute the deal as so-called global coordinators with the help of Goldman Sachs, Deutsche Bank and Jefferies as bookrunners, according to Reuters.

A checkered past but a bright future?

SUSE is Europe’s leading Linux software company. But over the years they have changed owners several times. First, the company was acquired by Novell in 2004. Then Attachmate, with some Microsoft funding, bought Novell and SUSE in 2010. And then Micro Focus purchased Attachmate in 2014 and SUSE was spun off as an independent division.

Finally, EQT purchased SUSE from Micro Focus for $2.5 billion in March 2019.

Since finding a home with EQT, SUSE has posted steady growth. The company’s Q3 revenue, reported in September 2020, had increased 14% year over year. This came despite the results of the Coronavirus pandemic on the global economy. 

In particular, SUSE’s Cloud ACV (Annual Contract Value) bookings flourished with 81% growth. This marked 14 consecutive quarters of year-over-year cloud ACV increase.

The German Linux developer also reported a 35% increase year to date in customer deals worth more than $1 million. This represents a 50% jump in ACV bookings year over year for SUSE Linux Enterprise Server (SLES) for SAP Applications – another German software powerhouse.

Following Red Hat’s lead

SUSE’s business model is also evolving. While the company remains a major star in the Linux firmament, it has lately been focusing on containers and clouds. In short, SUSE is pursuing a similar evolution as its Linux-based competitors Canonical and Red Hat. In July 2020, SUSE agreed to buy Rancher Labs in a major move into the Kubernetes space.

Regarding the specifics of the SUSE deal, Reuters reports that EQT declined to comment. Also, some of the banks involved also declined to comment, while others were not immediately available for comment, Reuters said.