Senior Solution: The IPO
Senior Solution, a São Paulo-based IT company specializing in software development and solutions for financial institutions, was founded in 1996 by Bernardo Gomes and Luciano Camargo. In the late 1990s, the company focused on customized IT projects and maintenance. Its business grew from BRL 0.2 million to BRL 7 million in 2002. By 2004, there was increasing consolidation in the banking sector in Brazil, with several mergers taking place, posing both challenges and opportunities for companies like Senior Solution. The sector was highly fragmented with more than 150 providers, none of which held more than 5% of the market. In late 2004, Senior Solution closed its first merger with NetAge, a slightly smaller competitor specializing in treasury solutions. In 2005, after a strong growth period, the company announced changes in its shareholder base when Stratus, a private equity investment company focusing on Brazil’s mid-tier market, bought shares to the value of BRL 2.5 million, 20% of Senior Solution’s capital. A rigorous M&A strategy followed with further acquisitions in 2006, 2007 and 2010.
The case provides an opportunity to discuss the links between finance and strategy. It also allows an analysis of capital raises, underpricing and valuation, emerging markets, IPOs and ownership structures, PE investors, and growth strategies in creating firm value. And it provides an opportunity to analyze a variety of strategic, organizational, financial and economic issues associated with emerging markets.
Manufacturing, Technology, Finance and Insurance
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