Private equity giant Blackstone announced an agreement today to acquire leading ESG software, data, and consulting services provider Sphera from Genstar Capital, in a deal valuing the company at $1.4 billion.
Formerly the Operational Excellence & Risk Management business (OERM) of business information provider IHS Inc., Sphera was acquired by private equity investor Genstar in 2016. Sphera works with organizations around the world to help them surface, manage, and mitigate ESG risk in the areas of Environment, Health, Safety & Sustainability, Operational Risk Management and Product Stewardship.
Paul Marushka, President and CEO of Sphera, said:
“We are excited to partner with Blackstone on this next stage of our journey as we drive our vision of integrated Environmental, Social and Governance (ESG) cloud-based software, data and services. With this significant investment of new capital, Sphera will expand the ESG digital solutions on its SaaS platform with unique data sets and differentiated consultative services throughout the world.”
Martin Brand, Head of North American Private Equity at Blackstone and Global Co-Head of Technology Investing, added:
“Sphera has built world-class technology and is exceptionally well positioned in the fast-growing ESG sector. We are looking forward to helping Paul and his team accelerate Sphera’s further expansion.”
The deal highlights the growing focus of ESG as a key theme for investors, both within and beyond the private equity space, as companies increasingly work to identify, manage and report on the sustainability factors impacting their businesses and stakeholders. Blackstone has been actively building out its ESG talent, including a series of recent global ESG-focused hires.
Eli Nagler, Senior Managing Director at Blackstone, said:
“The increasing importance of environmental, social, governance issues to businesses globally is a key thematic investing focus for Blackstone. Sphera has established itself as a market leader in the ESG software and solutions space, and we’re excited to partner with Paul and this best-in-class management team to continue to accelerate their impressive growth trajectory.”
The deal also marks another major ESG tools and services transaction for Genstar, an early investor in the space. Earlier this year, Genstar completed the sale of corporate governance and ESG data and analytics company Institutional Shareholder Services (ISS) to Deutsche Börse in a transaction valuing ISS at $2.3 billion.
Geoff Miller, Director at Genstar, said:
“In 2016, Genstar partnered with Paul Marushka to build a leading software platform in ESG and operational risk management. We have been thrilled with the leadership position Paul and his team established after the initial acquisition of Sphera. The Company has made significant investments in the business, expanded the company’s geographic and end-market reach, and executed a number of key acquisitions to expand the company’s portfolio of cloud-based applications. With Sphera’s strong management team and a robust sales and marketing organization, the company is poised to continue its growth with the support from Blackstone’s global team.”