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EQT Agrees $3 Billion Deal for Compliance Risk Firm Avetta

(Bloomberg) -- EQT AB has agreed to acquire compliance software provider Avetta LLC, as private equity firms begin to regain their appetite for multibillion-dollar transactions.

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The Stockholm-headquartered investment firm is buying Avetta through its EQT X fund from Welsh Carson Anderson & Stowe, according to a statement on Tuesday that confirmed an earlier Bloomberg News report.

Financial details were not disclosed. The deal values Avetta at about $3 billion, including debt, people familiar with the matter said, asking not to be identified discussing confidential information.

At that price, EQT is paying about 24 times Avetta’s projected 2024 earnings before interest, tax, depreciation and amortization of $125 million. It had been competing with other private equity firms, including Warburg Pincus and Bain Capital, for Avetta, Bloomberg News reported previously.

Founded in 2003, Avetta operates a cloud-based supply chain risk management and commercial marketplace platform for suppliers and contractors.

“Supply chain risk software is at the top of mind for us,” EQT partner and co-head of technology, Arvindh Kumar, said in an interview. “When you think about components like ESG — having to deal with contractors, vetting them, making sure they’re diverse — you’re looking at a big market with a lot of complexity. We like businesses in markets that have high complexity, and technology is a solution to solving for that complexity.”

Avetta operates what’s known as a two-sided network, which places hiring contractors on one side and suppliers on the other. Kumar said that this model has proven to be “incredibly durable and highly resilient” and has growth levers including M&A, adoption of automation tools and geographic expansion into Europe and Asia.

Private equity dealmaking is slowly starting to recover from a period of subdued activity among buyers and sellers. On Monday, Advent International agreed to buy Canadian payments processor Nuvei Corp. for $6.3 billion, including debt.

EQT has more than €50 billion ($53.8 billion) in equity invested in tech assets globally, with the sector accounting for over 30% of capital deployed in recent funds.

Goldman Sachs Group Inc. advised Avetta, while Citigroup Inc. worked with EQT.

(Updates throughout with details, commentary from EQT partner.)

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