Constellation’s Ray Wang: Koch Investment a Win for Infor Customers
Koch Equity Development's recent investment in Infor "accelerates funding for what customers really want: industry apps. … The result — a dream deal that benefits all," concludes Constellation Research analyst R "Ray" Wang.
In a new report, "Koch Industries invests $2.5 billion into Infor — Infor customers gain a valuable investor in digital transformation," Wang notes:
"The investment by Koch Industries into enterprise software giant Infor, announced Nov 17, 2016, shows the willingness of traditional industrial companies to make bets on technology and, specifically, on enterprise software. The $2.5 billion investment will … enable Infor to make additional marketplace investments, and put Oracle and SAP on watch for replacement at Koch. Constellation believes … the Koch purchase of a large minority stake will bolster Infor's R&D investments and accelerate Infor's mergers and acquisitions activity."
Here's a summary:
Constellation sees three major implications from the Koch investment:
1. Koch seeks technology play. Charles Koch's personal interest and a strong investment thesis drove the deal. Koch's attraction to Infor stems from the transformation of the software company with the arrival of Charles Phillips, formerly of Oracle, in October 2010.
A fast pace of acquisitions, a push into retail, and acquisition of GT Nexus, a supplier of cloud-based supply chain software, put Infor at the confluence of new business models and a refresh cycle.
2. Capital injection enables Infor to expand industry-specific investments. Infor's commitment to industry-specific software is unrivaled. Since 2010, Infor has invested more than $2 billion into product design and development.
Koch's investment will speed up the development of a variety of industry-specific clouds. Moreover, Constellation expects Infor to use the Koch cash to accelerate mergers and acquisitions in a highly competitive environment.
3. Koch will replace legacy Oracle and SAP investments over time. Koch will most likely look to modernize its aging platforms with Infor's newer products.
Over the next seven years, Koch must replace many legacy Oracle and SAP installations. Expect Koch to transition to a global Infor cloud platform and lead the way in developing more industry-specific clouds to serve the various Koch business models and product lines.
The bottom line: Investment creates win-win for Infor customers and Koch Industries.
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