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One of Europe’s biggest technology investors has struck its first new buyout deal since a sell-off in software stocks earlier this year spooked the private capital sector and put dealmaking on hold.
Software-specialist private equity investor Hg has agreed to buy California rights and royalties management company Rightsline for about $500mn including debt, according to people familiar with the matter.
The deal for a group that counts Disney, the BBC and Warner Bros Discovery as clients is the first new buyout transaction that the $110bn asset manager has agreed since AI advances hit software groups’ valuations in February.
Software-as-a-service had been a focus for private equity and credit firms over the past decade, as the businesses’ recurring revenues and loyal customers allowed investors to load them up with debt.
But the release earlier this year of new tools from AI group Anthropic drove a sell-off in listed software companies — dubbed the SaaSpocalypse — as well as putting software buyout deals on ice.
Uncertainty about AI has made it difficult to assess companies’ long-term value and private equity firms have struggled to persuade their backers of the merits of software deals, advisers said.
There are some signs of a tentative recovery, however, with the S&P North American technology software index up by a quarter from its April low.
Investors said the market was starting to discern between different software companies when assessing AI disruption risk.
One person familiar with the deal said that Rightsline’s software, which allows large companies to manage complex licensing of intellectual property across countries and languages, was regarded as difficult for AI to replicate because it was based on customer data.
It could map “billions” of rights combinations across each client’s characters, plot lines and other intellectual property, they added, with big companies relying on it to avoid costly licensing conflicts.
The European software market has been looking to Hg for signs of activity given its size and clout in the sector. The group raised almost $30bn last year across three funds, leaving it with significant capital to deploy.
The firm was forced to delay its blockbuster London listing of €19bn accounting software company Visma this year in the wake of the software sell-off.
Hg declined to comment. Rightsline did not respond to a request for comment.
