Rocket Software Raises $91.9 Million Through Equity Sale

October 19, 2009 Timothy Prickett Morgan

It looks like Rocket Software is building up a war chest to do more acquisitions.

According to a filing last week with the Securities and Exchange Commission, Rocket Software sold a $91.9 million equity stake into itself. And according to the filing, Rocket Software is saying that under rule 506 of the SEC rules, it does not have to disclose who it sold equity to. This rule allows a company to issue securities with no upper limit in their value to up to 35 “unsophisticated investors” plus an unlimited number of “accredited investors.” (What a strange rule. Do whatever you want, in essence.)

A report in the Boston Business Journal notes that this is the first time Rocket Software has sold equity, and that the company has Andrew Gesell and Jeffrey Vogel, of private equity firm Court Square, as board members. The paper estimates that Rocket Software, which was founded in 1990, has annual revenues on the order of $30 million.

As The Four Hundred reported a month ago. Rocket Software has just bought the UniiVerse and UniData databases and tool business from IBM for an undisclosed sum. Notably, Rocket Software owns midrange application modernization tool vendor Seagull Software, and the company tried to buy NetManage for $69 million back in early 2008, but called the deal off a few months later because Rocket Software could not raise the funds to do the deal. (In May 2008, NetManage was acquired by MicroFocus for $73.3 million.)

Rocket Software has not said what it intends to do with the funds it has raised. Perhaps it is being used to pay off the IBM U2 tools acquisition, perhaps it is a war chest for future acquisitions, or perhaps a little of both. Or perhaps the equity investor has taken a majority stake in Rocket Software. The company is not saying.

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