JDA Software announces $570M equity investment

JDA Software Group, Inc. announced Friday it completed an agreement with funds managed by Blackstone (NYSE: BX) and New Mountain Capital (NMC) to effect a recapitalization of the company through a $570 million equity investment.

The new capital will be used to fuel JDA’s product innovation and growth plans to deliver next generation cloud-based solutions and accelerate opportunities for current product development and enhancements.

With this strategic investment, JDA will be well-positioned to continue building on its market-leading portfolio of supply chain and omni-channel retail solutions. The new equity investment is expected to be completed by early quarter four 2016, pending customary closing conditions.

“This is a very exciting day for JDA and a testament to the terrific work of our associates and our 4,000 loyal global customers,” said Bal Dail, chairman and CEO, JDA.  “This investment will accelerate our future growth plans and vision for the business.

“It not only reaffirms our vision, financial performance, and innovation track record, but also our reputation as the market leader in our space and our unique ability to enable customers to capture opportunities presented by today’s digital transformation.

“This investment will accelerate the development of our SaaS-based solutions and allow us to develop innovative new solutions on Google Cloud Platform while enhancing our current large R&D investment in our existing products.  No one spends more on supply chain-focused R&D than JDA, and we look forward to continuing to innovate for customers through our JDA Labs and our best-in-class product development teams.”

Strengthened Capital Structure to Help Drive Strategic Growth

The new equity investment will have no cash interest costs for JDA and will be used to retire existing debt and reduce JDA’s interest expense by $70 million per year. The remaining debt will have no operating covenants and the first maturity will not be until the end of 2023. NMC, which has been the company’s majority shareholder since JDA’s merger with RedPrairie in 2012, will be investing in the equity alongside Blackstone, and will remain as the company’s majority shareholder post-investment.

“We are thrilled to partner with New Mountain Capital to make this strategic investment in JDA,” said Viral Patel, managing director at Blackstone. “We are confident that the company is primed for accelerating growth in the years ahead.”

“Blackstone has strong expertise and history in the software space, and after lengthy due diligence, we are highly confident in the strategic direction and management at JDA,” said Martin Brand, senior managing director at Blackstone. “JDA is the proven leader in supply chain software, has a strong vision for the future, and is uniquely positioned to make the strategic investments that will expand its technological and market share leadership in the years ahead.”

“We thank JDA’s management for the outstanding job they have done over the past two years as JDA has transformed itself and refocused its commitment to being customer-centric. We are excited to be a part of the major success that we believe JDA can achieve in the years ahead,” said Pete Masucci, managing director of New Mountain. “We are pleased to have Blackstone as our shareholder-partner to help us achieve these goals and we’ll work together with JDA to grow the core business, while launching new initiatives and offerings that support JDA’s long-term strategy and vision for delivering a seamless supply chain to its customers.”

Investment Fuels Future SaaS Development and Company Growth

This strategic investment will help accelerate the current growth trajectory at JDA as the company closed the first half of 2016 with its highest year-over-year growth in software revenue since NMC merged the company with RedPrairie in 2012. In the second quarter of 2016, JDA posted overall revenue growth of 7 percent versus the prior year (8 percent in constant currency), with software revenue growth of 62 percent and 44 percent growth in Software-as-a-Service (SaaS) revenue.

Recent JDA Product Innovations Will Be Accelerated by Investment

Earlier this year, JDA announced the general availability of JDA Retail.me, which is the first JDA SaaS solution built on Google Cloud Platform and is a result of JDA’s strategic collaboration with Google. JDA Retail.me has reinvented retail planning from the ground up and is the first of several planned applications JDA will be introducing as part of this next generation retail planning solution. This new capital investment will help JDA accelerate research and development to continue building JDA’s next generation of cloud-based solutions.

JDA’s future innovation is driven in large part through JDA Labs, a dedicated research and development group within JDA committed to accelerating technology innovation by identifying, developing and deploying disruptive capabilities that can transform the supply chain and retail markets. As a company, JDA holds more than 400 patents granted and pending, and has filed 28 patent applications in the last 18 months alone.

Recent product innovations and enhancements across JDA’s existing portfolio include:

  • Delivering a completely reimagined user experience for warehouse management, along with comprehensive support for omni-channel fulfillment and returns management for manufacturers and retailers.
  • Expanding its market-leading control tower and S&OP capabilities through multi-dimensional in-memory computing, while significantly improving planning speed through packaged SAP HANA integrations.
  • Broadening capabilities for store workforce schedule management, enabling support for increasingly stringent and diverse schedule laws, as well as delivering long-range workforce planning capabilities to strategically manage human capital assets.
  • Delivered comprehensive real-time visibility and predictive analytics within JDA Transportation Management across ocean, air, and ground transportation through a digital hub strategy, powered through partnerships with TransVoyant, INTTRA, and FourKites.
  • Creating next generation Store Logistics solutions by leveraging JDA partner Intel’s Internet of Things (IoT) platform to provide real-time inventory tracking to reduce out-of-stocks, increase associate productivity, and deliver complete inventory visibility in-store.

In addition, JDA launched the Future Series outlining the future of supply chain management and retail operations. This series is unique in the industry and has been equally well-received by customers and industry analysts.

Bank of America Merrill Lynch, Credit Suisse, and Goldman, Sachs & Co. acted as advisors to Blackstone on the transaction.

JPMorgan Chase & Co. and Seth Bernstein SMB Capital acted as advisors to JDA on the transaction.

 

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