Private equity firm to buy Bravura Solutions, but founders’ shareholdings still in doubt

Private equity firm Ironbridge Capital will buy financial services software provider Bravura Solutions for $246 million – but only if Bravura’s founders Iain Dunstan and Simon Woodfull can prove they still own the 43 million shares they claim to own.

Under the takeover proposal, Dunstan and Woodfull, who control just over 30% of Bravura’s shares, will swap their stakes for cash and shares in a new holding company set up by Ironbridge.

But ownership of Dunstan and Woodfull’s shares is in dispute. The pair financed their holdings through a margin loan with failed broker Lift Capital, which was placed into administration in April. Lift’s major creditor Merrill Lynch has sold some of the shares owned by former Lift clients, but Dunstan and Woodfull told the ASX on 2 May that Merrill Lynch had not sold their Bravura shares. Dunstan and Woodfull have held discussions with the administrators about paying back their margin loans and recovering their shares.

CEO Iain Dunstan was not available for comment this morning.

The deal – which values Bravura’s shares at $1.73 compared with a price of $1.46 when the shares were last traded on 11 April – is expected to be completed by August, pending shareholder and court approval.

The takeover continues the rollercoaster ride of Bravura since its establishment four years ago. Dunstan and Woodfull were running a division of Computer Sciences Corporation (CSC) in late 2003 when they saw an opportunity to start their own company.

While the division was travelling well, CSC was unwilling to invest in the research and development needed to build the next generation of products. Woodfull went to an investment bank that specialised in management buyouts, mortgaged their homes and started negotiations to buy the division.

Twelve months later, Bravura Solutions was born. The pair listed the company in June 2006 at $1.12 a share and its share price rocketed to about $3.00 in January 2007. But the shares have gradually fallen since then, despite relatively good financial results.

The chair of Bravura’s independent board committee, Elana Rubin, said yesterday that Bravura’s directors had examined a number of alternative offers before recommending Ironbridge’s deal.

“Ironbridge’s proposal provides an attractive opportunity for shareholders to realise value in respect of their shareholding in Bravura.”


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