Private equity firm Warburg Pincus is in advanced talks to invest in Vista Equity Partners-controlled Infoblox Inc. in a deal that values the closely held technology company at more than $3 billion, including debt, according to people familiar with the matter.

Infoblox, which makes software that helps large companies manage their networks, could announce the investment as early as Tuesday, said the people, who asked not to be identified because the matter is private.

Vista and Warburg Pincus will share equal ownership of the combined company after the deal closes, the people said.

The plans aren’t final and the talks could still fall apart, they said.

Representatives for Warburg Pincus, Vista and Infoblox declined to comment.

A $3 billion-plus value is up from $1.6 billion, the amount that Vista acquired Infoblox for in a take-private deal in 2016, according to a statement at the time.

Vista and Infoblox had been working with financial advisers for a few months and held talks with several private equity firms before opting for the Warburg Pincus offer, the people said.

Private equity firms in recent years have brought on their rivals to invest in their portfolio companies. A new partner can provide some return on investment while also setting a new valuation on an asset. Vista did a similar deal in 2018 when it brought on Canadian private equity firm Onex Corp. to be an investor in PowerSchool Group LLC.

After it was taken private, Infoblox shifted its business model from selling hardware to offering cloud-based software which provides more recurring revenue, the people said. It also built out its security products to help large companies avoid connecting their networks to unsafe websites, they said. The company has gotten a boost during the coronavirus pandemic from the surge in employees working from home in the U.S., its largest market.

Infoblox’s annual revenue grew in the last fiscal year by about 20% to about $500 million under Chief Executive Officer Jesper Andersen who stayed on after the Vista buyout, the people said.

The company’s cash-adjusted earnings before interest, taxes, depreciation and amortization was $170 million for the last 12 months, the people added.

It also has expanded its workforce to 1,400 employees from about 750 employees before it was acquired, the people said. The hiring expansion was largely outside of its Santa Clara, California headquarters and was mostly in India and in Tacoma, Washington, they added.

Source: Bloomberg

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