Aspen Technology (Nasdaq: AZPN) is the leading supplier of integrated software and services to the process industries. A global business with operations in 25 countries, AspenTech serves over 1,500 customers, including most of the world’s largest chemical, petroleum and pharmaceutical companies.
Advent invested $100 million in AspenTech as part of a recapitalization of the business in August 2003. We are an active investor with a large minority stake and significant board representation. We also have a long history of involvement with the company, having made two prior investments, one to help fund its expansion in the mid- to late 1980s and the other to finance its acquisition of a UK software house in 1991. AspenTech went public in 1994, and we exited both of our earlier positions successfully.
The thesis for our latest investment centered on the turnaround of the company’s unprofitable supply-chain division, and then driving the business to leverage its market-leadership position and blue-chip client base against a backdrop of recovering IT expenditure in the process industries.
Since the 2003 recapitalization, new management has focused on improving bottom-line performance, optimizing the structure of the 25 acquisitions that made up the company, aggressively reducing operating costs and introducing working-capital improvements. As a result, the company has moved from debt to a positive cash-flow position, and profitability is up substantially.