Skytap, a Vistara Growth Portfolio Company, Acquired by Kyndryl (NYSE: KD)

Portfolio News, Vistara News

We’re excited to share the news that Vistara Fund IV portfolio company Skytap has been successfully acquired by Kyndryl (NYSE:KD), the world’s largest IT infrastructure services provider ($6B IT infrastructure spinoff from IBM). Vistara’s investment in Skytap was announced in October 2023.

The opportunity with Skytap was sourced through a relationship with the company’s CFO, who previously held the same role at BitTitan, a Vistara Fund III portfolio company which exited to a private equity backed strategic in June 2021. Skytap was seeking incremental growth capital to achieve additional milestones ahead of a potential exit without having to price the company’s equity ahead of a transaction – a common use case for Vistara’s flexible and often less dilutive growth capital.

Skytap’s innovative technologies for managing complex workloads in cloud native environments will now be leveraged by Kyndryl to help more customers accelerate their adoption of advanced analytics, artificial intelligence, and DevSecOps.

Noah Shipman, Partner at Vistara Growth, commented “We are glad to have played a part in the final mile of Skytap’s journey, providing capital for the company to achieve some important milestones and a strong balance sheet ahead of its sale process.  We thank the Skytap team and its investors for selecting Vistara to finance the last leg of growth and congratulate Kyndryl on its strategic acquisition of a great technology platform and company.”

Kyndryl announces its acquisition of Skytap to accelerate hybrid cloud adoption and help customers modernize mission-critical infrastructure platforms

NEW YORK, May 13, 2024 – Kyndryl (NYSE: KD), the world’s largest IT infrastructure services provider, today announced that it has acquired privately held Skytap, a leading specialized workload services provider.

“The acquisition of Skytap reflects the proactive steps we’re taking to invest in our mission-critical capabilities where our global alliance partnerships and innovation enable us to help our customers transform and grow,” said Dave Simpson, Global Practice Leader for Cloud at Kyndryl.

Kyndryl’s acquisition of privately held Skytap will expand the company’s hybrid cloud services portfolio. Skytap’s innovative technologies will be combined with Kyndryl’s expertise in helping customers utilize cloud native services to accelerate the adoption of advanced analytics, artificial intelligence, and development, security and operations (DevSecOps). Skytap is recognized as having particularly strong capabilities for transitioning complex workloads to support hyperscaler environments. Skytap’s technologies enable customers to move and run their mission-critical systems in the public cloud with minimum change.

Additional portfolio optimization

Kyndryl also announced that it has entered into a definitive agreement to divest its transaction processing platform for the securities brokerage industry in Canada, known as Securities Industry Services (SIS), to Broadridge Financial Solutions, Inc. Kyndryl intends to provide managed services and capabilities to Broadridge related to SIS following the divestiture.

Revenues generated by both Skytap and SIS over the last twelve months were less than 1% of Kyndryl’s annual revenue. While Kyndryl expects to record a transaction-related gain (excluded from its adjusted results) in conjunction with the SIS divestiture, the transactions have no impact on Kyndryl’s fiscal year 2025 outlook, which was provided on May 7, 2024. The company intends to use the net proceeds from the two transactions for general corporate purposes.

Terms of the transactions were not disclosed. Closing of the SIS transaction is subject to customary closing conditions, including required regulatory approvals.

About Skytap

Skytap is a cloud service purpose-built to natively run traditional systems in Microsoft Azure and IBM Cloud. As the best cloud service to support AIX, IBM i, and Linux on IBM Power together with x86, Skytap makes it easy to evolve traditional workloads by rapidly migrating them to the cloud. Enterprises around the world like IBM, Honeywell, CA Technologies, and Okta use Skytap for production workloads, disaster recovery, virtual training labs, and application development. Skytap’s cloud environment simplifies management, reduces IT costs, speeds up application development, and allows organizations of all sizes to modernize at the pace of their business.

About Kyndryl

Kyndryl (NYSE: KD) is the world’s largest IT infrastructure services provider, serving thousands of enterprise customers in more than 60 countries. The company designs, builds, manages and modernizes the complex, mission-critical information systems that the world depends on every day. For more information, visit www.kyndryl.com.

About Vistara Growth

Vistara Growth provides highly flexible growth debt and equity solutions to leading technology companies across North America. Founded, managed, and funded by seasoned technology finance and operating executives, “Vistara” (Sanskrit for “expansion”) is focused on enabling growth for the ambitious entrepreneurs we invest in, our investors, our people, and the communities we operate in.  For more information, visit vistaragrowth.com

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