Luminate Capital Partners, led by former Silver Lake Partners managing director Hollie Moore Haynes, has made an investment in StarCompliance LLC, a compliance software developer. Haynes is one of The Most Influential Women in Mid-Market M&A.
StarCompliance supplies the financial services industry with enterprise software for handling regulatory risks and compliance matters. Founded in 2000, the New York-based target helps businesses manage, prevent, detect, report and resolve employee conflicts of interest by monitoring employee activity. StarCompliance’s technology checks for activities involving personal trading, gifts and entertainment, political contributions and outside business activities. The investment from Luminate will assist the target in driving product innovation. Financial terms of the deal were not disclosed.
“Regulatory requirements and the associated risks of non-compliance continue to increase for financial firms and many firms still manage this mission-critical process through manual or disparate in-house systems,” states Haynes.
Based in San Francisco, Luminate is focused on acquiring middle-market software companies with $10 million to $50 million in annual revenues. The firm seeks to purchase companies from the founders, early venture capital investors, or in carve-out deals. The deal comes on the heels of Luminate raising its first fund with $265 million in capital commitments in June. Luminate Capital, recognized as one of 10 Young and Thriving PE Firms worth watching, also invested in airplane software developer Comply365. The firm is interested in backing U.S. providers of business-to-business enterprise software with an established product, a happy customer base, a market leadership position, a management team to partner with, and the potential to grow 10 percent to 30 percent annually, along with certain software industry financial metrics.
Increasing regulatory pressure on banks and other financial institutions have created a need for these unique software developers. For example, Vista Equity’s acquisition of Regulatory DataCorp Inc., a risk and governance software maker; Markit’s (Nasdaq: MRKT) purchase of CoreOne Technologies from Symphony Technology Group in a $200 million cash deal; and Aquiline Capital Partners’ investment in Fenergo. Kirkland & Ellis LLP served as legal adviser to Luminate, while Star compliance was advised by Robert W. Baird & Co. Inc., DLA Piper and Paley Rothman.