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Infor customers may gain from Koch's $1.5B investment

Infor customers may get new product capabilities from a $1.5 billion investment by Golden Gate Capital and an investment arm of Koch Industries.

ERP vendor Infor has received a $1.5 billion investment, an amount equal to about half its annual revenue. The investment by Koch Industries and Golden Gate Capital is similar to previous ones and may help Infor customers with expanded product capabilities, analysts said.

Announced Wednesday, the news comes in advance of Infor's IPO planned in the next 12 to 24 months, depending on market conditions.

It also represents a continuing endorsement of its cloud-based ERP and human capital management (HCM) systems by Koch Industries, one of the largest Infor customers.

The investment was made by Koch Equity Development, the acquisition and investment arm of Koch Industries. Koch is a privately held multinational, which includes Georgia-Pacific, a maker of paper products such as Dixie and Brawny. It also owns mineral development, energy, chemical and other businesses.

The other investor, Golden Gate Capital, is a private equity firm based in San Francisco that made its first investment in Infor in 2002, the year the ERP vendor was founded.

Analysts say investment will help products

Mickey North Rizza, an ERP analyst at IDC, said the investment shows "great confidence" by the existing equity partners.

The previous rounds of financing "went into extending their product capabilities and industry coverage," she said, and "this investment will continue that but will also go into the capital restructuring in preparation for an IPO."

Ray Wang, principal analyst at Constellation Research GroupRay Wang

The investment means "more money for expansion and investment in product and innovation," said Ray Wang, principal analyst at Constellation Research Group.

Infor, which employs more than 17,000, has grown in part through acquisitions, notably in 2011 with its acquisition of ERP vendor Lawson Software in a deal valued at $2 billion. Many of the products used by Infor customers are cloud-based, and some are also designed for specific industries. The New York-based firm claimed that more than 72% of all hospitals in the U.S. run Infor applications, and said it is heavily represented in automotive suppliers.

Koch as Infor customer and investor

Infor announced in 2017 that Koch Industries was implementing its CloudSuite product for financial and human capital management. The firm employs about 120,000 people. That same year, Koch Equity made a $2 billion investment in Infor.

Koch is not only an investor and user of Infor products, it has also become an active voice for the ERP vendor. In September, firm officials spoke at Inforum, a conference for Infor customers. The firm said the product would reduce HCM costs, as well as improve hiring and retention.

In this funding and IPO announcement, Jim Hannan, executive vice president and CEO of Enterprises at Koch Industries, said, in a statement, that "Koch was a customer of Infor before we became an investor in the company, and Koch Industries' companies continue to move their most mission critical applications to Infor CloudSuites."

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