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Analyzing Informatica’s Leveraged Buyout Deal

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Nov. 20 2020, Updated 10:48 a.m. ET

Overview

In this series, we’ll analyze the performance of the stocks in the First Trust ISE Cloud Computing Index Fund ETF (SKYY) that are a part of the Application Software subsector.

Since January 2015, SKYY generated returns of 4.47%. It closed at $28.71 on Friday, August 21, 2015.

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Subsector performance

In the above chart, you can see that the Technology, Hardware, and Storage subsector generated returns of -14.93%. Also, the IT Consulting and Communications Equipment subsector generated returns of -7.42% and -2.68%, respectively.

The subsectors that have outperformed SKYY include Home Entertainment Software, Specialized REITs, and Internet Retail with returns of 21.92%, 25.44%, and 112.05%, respectively.

The Application Software subsector generated returns of 10.95% with Informatica (INFA), Salesforce (CRM), and Adobe (ADBE) generating YTD (year-to-date) returns of 27.78%, 23.79%, and 18.46%, respectively.

Netflix (NFLX) has generated YTD returns of 152.84%. Amazon has generated returns of 71.26%, respectively. In comparison, Teradata (TDC), Rackspace (RAX), and Brightcove (BCOV) generated negative returns of 30.11%, 36.15, and 28.92%, respectively, since January 2015.

Leveraged buyout

In April 2015, it was announced that Informatica agreed to be bought by Canada Pension Plan Investment Board and Permira Advisors for $5.3 billion. Currently, this is the largest buyout deal in 2015. The above mentioned private equity investors will pay $48.75 per share, according to a report from the Wall Street Journal.

You can get diversified exposure to Informatica by investing in SKYY. It holds 3.51% of the stock.

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