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VC firm buys into Net software

Venture capital firm Thayer Capital Partners purchases a majority stake in Software AG Americas, the U.S. arm of German software maker Software AG.

Thayer Capital Partners has ambitious Internet plans for Software AG's Americas division.

The closely held Washington, D.C.-based investment firm today announced that it has purchased a majority stake in Software AG Americas, the U.S. arm of German software maker Software AG.

Thayer will provide capital to beef up the unit's product line to include tools for building corporate intranets and Internet sites, according to Rick Rickertsen, a partner in the investment firm. The new company will also continue to sell and support its German parent's software.

Thayer paid about $150 million for a majority stake in the company, according to Rickertsen, who declined to detail the exact size of the investment. The other stakeholders in the division include the Germany parent company and a management team comprised of Software AG Americas' president and CEO Daniel F. Gillis and five other members of his senior management team.

Gillis will also sit on the new company's board and run the day-to-day operations.

Thayer expects to hold onto the company for about five years and is prepared to provide capital for expanding the product line. If the new company is successful in expanding revenues and market share, Thayer may take it public to provide additional development money, Rickertsen said.

The Americas operation plans to add new tools by partnering with and acquiring smaller Internet software developers. The first deals are likely be announced later this year, Rickertsen added.

Meanwhile, Gillis said the money Thayer brings to the new company "will allow us to grow very rapidly" and take advantage of the rapid pace of U.S. development cycles for Internet software. He said the company will initially add electronic commerce, data warehousing, and other Net software tools to its stable to help existing customers migrate Software AG's software to the Net.

The Americas unit of Software AG posted $162 million in revenues last year from sales in North and South America, Japan, and Israel. The unit has hundreds of customers among large corporations, government offices, and universities. The new company will continue to exercise exclusive rights to market and distribute Software AG software and services in the three geographical areas.

The 25-year-old unit contributes about a third of its German parent's worldwide revenues, according to Gillis. As part of today's deal, Software AG also has the option of distributing Internet products developed by the U.S. company and its partners to its customers worldwide.

Software AG chairman Edwin Koenig will have a seat on its board, along with Gillis and Thayer principals Ricketsen and Paul Stern, the company said.