Insurtech Majesco to be acquired by equity firm Thoma Bravo
- Insurtech Majesco will be acquired by equity firm Thoma Bravo.
- The acquisition comes as cloud services are due to overhaul the insurance sector and M&A activity is picking up.
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Global cloud insurance software solutions provider Majesco has signed an amended agreement to be acquired by Thoma Bravo, a private equity firm focused on the software and technology-enabled services sectors, per a press release.
The agreement was amended after an undisclosed third party made an offer to purchase Majesco, leading Thoma Bravo to increase its offer by 22%. The transaction will now value Majesco at $729 million, and the insurtech will operate as a privately held company after the acquisition. The merger is still subject to approval from Majesco's shareholders and its parent company, Majesco Limited.
Majesco already has an established product suite and client base, and cloud services will continue to be in high demand as they overhaul the insurance sector, likely making Majesco an attractive acquisition.
- Majesco already boasts a high-profile client base and offers a range of services. Majesco's clients include large legacy insurers such as Aon, Arch Insurance Group, and MetLife. It offers a range of cloud-based insurtech solutions tailored to insurers with property and casualty (P&C) operations and life and annuity (L&A) services. Majesco provides solutions that enhance functions along insurers' value chain, from policy management to billing and claims.
- Cloud services have the potential to significantly increase insurers' agility while cutting operational costs. Cloud computing solutions can help insurers achieve greater IT agility and reduce the time it takes to roll out innovative products, as they can better collect and analyze large amounts of data on their customers, among other things. Additionally, cloud-based solutions are less expensive than back-end server systems that require firms to purchase hardware and maintain often complex legacy systems.
The acquisition comes at a time when M&A activity is down due to the coronavirus pandemic. In H1 2020, fintech M&A deals were worth $95 billion, compared with $150 billion in H1 2019, per FT Partners. The slowdown in M&A deals can be partly attributed to the coronavirus putting a strain on company budgets and cash flow. However, we could see more M&A deals in the next half of the year as countries open up and resume normal life.
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