Exclusive: BMC Software explores IPO: sources

(Reuters) - U.S. business software company BMC Software Inc [BSII.UL] is holding conversations with investment banks about an initial public offering (IPO) that could value it at more than $10 billion, including debt, people familiar with the matter said on Friday.

The move comes as the private equity firms that control BMC - Bain Capital and Golden Gate Capital - consider ways to start cashing out on their investment after taking the company private in 2013 in a $6.9 billion leveraged buyout.

BMC has held discussions with banks in recent weeks about appointing underwriters for an IPO, the sources said. The timing of the IPO has not been decided, and the deliberations have not been affected by this week’s stock market volatility, the sources added.

The sources asked not to be identified because the matter is confidential. BMC did not immediately respond to a request for comment, while Bain and Golden Gate declined to comment.

Based in Houston, BMC provides software that helps corporations organize their information technology management functions. It generated revenue of $1.8 billion for the 12 months that ended Sept. 30, according to Moody‘s.

BMC has been facing increasing competition from so-called software-as-a-service technology rivals, and last year explored a merger with peer CA Inc (CA.O). That deal fell through over challenges in agreeing upon debt financing terms, sources said at the time.

BMC’s mainframe software business is estimated to generate approximately half of the company’s operating profit and cash flow, yet it is a flat to modestly declining business, Moody’s said in a research note in November.

January was the strongest month for IPOs on record in terms of proceeds, however IPO activity was blunted this week by wild swings in the U.S. stock market. The receptivity of the IPO market will hinge on such volatility subsiding.