The sale process for Aareon, a German ERP software provider owned by Advent and private equity (PE)-backed Aareal Bank, has kicked off amid keen interest from financial sponsors, three sources familiar with the situation said.

Information memoranda for the unit, which specialises in software-as-a-service-based (SaaS) property management systems, were sent out last week, the sources said, adding that management presentations are currently taking place.

Aareon is being marketed off around EUR 160m in forward-looking EBITDA for 2024, two of the sources said. Its annual revenue is in the range of EUR 350m, the third said.

A broad group of financial sponsors is currently taking a look at the Mainz-based company ahead of first-round offers, two sources said. A number of US-based strategics are also expected to show interest in Aareon, a fourth source familiar added.

PE firms expected to submit initial bids include KKR, CVC and Blackstone, two of the sources said. Hellman & Friedman (H&F) is also looking at Aareon, the third source added.

Non-binding offers for Aareon are slated to be collected in the beginning of June, two sources said. Arma Partners is advising on the sale, as reported.

Last year, this news service reported that a sale of Aareon was one of the most anticipated software deals expected in Germany for 2024 and could value the business at around EUR 2bn, implying an EV/EBITDA multiple of around 12.5x based off EUR 160m EBITDA.

Advent acquired a 30% stake in Aareon from Aareal Bank for EUR 260m in 2020, giving the company an EV of around EUR 960m and an equity value of around EUR 860m at the time, as reported.

Aareal Bank was then taken private last year for around EUR 2bn by a consortium including Advent, Centerbridge Partners and CPP Investment Board Europe, making the latter two parties indirect shareholders in Aareon.

In 1Q24, Aareon reported around EUR 40m adjusted EBITDA and EUR 108m revenue, up from EUR 18m adjusted EBITDA and EUR 83m revenue in the same quarter last year, according to Aareal Bank’s 1Q report. Recurring revenues accounted for around 83% of Aareon’s sales in the period.

In 2022, Aareon generated around EUR 75m adjusted EBITDA and EUR 308m revenues, according to a statement its website. For 2023, Aareon forecast EUR 90m-EUR 100m adjusted EBITDA and EUR 325m-EUR 345m revenue, with recurring business from SaaS, subscription and maintenance contracts serving as its main revenue driver.

Aareon has completed several acquisitions since Advent invested, including of Spanish property management software group Informatización de Empresas (Iesa); Netherlands-based competitor Embrace; and Germany-based Locoia, a low code integration platform, all in 2023.

Earlier this month, Aareon made a EUR 100m strategic investment in Stonal, a France-based property-management software platform publisher. In January, it acquired Blue Mountain Group, a Dutch provider of business intelligence solutions for housing associations, according to Aareal’s 1Q report.

It also acquired Swedish property company Momentum Software Group for EUR 168.1m in 2022. Aareon likewise sold its consulting subsidiary, phi-Consulting, to management that year.

Aareon offers one of the most comprehensive property management systems in Europe, covering the entire property life-cycle from funding to sale and providing services including property and contract management, integrated payments, maintenance and facilities management, according to its website.

Aareon has around 2,000 employees working across six regions in Europe. The company serves more than 13,000 customers and helps manage around 18m property units, according to its website.

Advent, Aareon, Aareal Bank, Arma, CPP Investments, Centerbridge, KKR, CVC, Blackstone and H&F declined to comment.