Apax Partners

SuSE Linux AG is the leading European Linux technology and services company. Linux is an alternative computer operation system, competing with UNIX and Microsoft. It was created in 1992 by Linus Torvald and has developed from a technology experiment for computer experts into a mainstream IT industry, supported by almost all major software and hardware vendors.
 
SuSE was established in 1992 by Roland Dyroff, Thomas Fehr, Hubert Mantel and Burchard Steinbild to exploit business opportunities that emerged from the newly-developed Linux. Linux had a commercial challenge: it is based on the concept of Open Source, which means the source belongs to the public and no one can charge a license fee. As a result, new commercially distributed software and services needed to be developed.

Funds advised by Apax Partners invested in SuSE in October 1999. At the time, SuSE’s challenge was to evolve from a technology-driven engineering company into a commercial and profit-driven technology leader in the Linux space. The company wanted to establish itself as a Linux technology provider and offer services and consulting as well.

When Apax Partners’ Funds invested in SuSE, the founders had done an exceptional job positioning SuSE as the technology leader but were still working to commercialize its business and were at risk of falling behind a US competitor. To help the company achieve its goals, Apax Partners’ Funds in Europe provided the necessary funds to grow SuSE’s business in Europe. It also formed an investment syndicate which included Apax Partners’ Funds in the US, which helped establish SuSE’s US presence, and Intel, which brought the technological and commercial support of one of the most successful IT companies. The investors also put new directors in place, including a non-executive director and a Chief Financial Officer.

With the support of its new investors and directors, the company signed crucial cooperation and distribution agreements with major software and hardware vendors and grew its consulting business significantly within one year after Apax Partners’ Funds’ initial investment. To accelerate growth and enable the company to keep up with the increasing demand for Linux, Apax Partners’ Funds led a new round of funding in December 2000 and brought in new strategic shareholders including SGI and Compaq.

Apax also used its industry contacts to help SuSE secure new contracts, which enabled the company to grow its list of customers and supporters into a Who’s Who in the IT industry.

Thedevelopment of SuSE from an engineering-driven Open Source community company into a serious player within the global IT market led to a direct investment in the company by IBM in September 2001. Apax used its industry network to identify a new CEO, Richard Seibt, who further developed the company’s market position and its technology. His success at the company led to a successful offer by Novell Inc. to buy SuSE Linux AG in October 2003.

Within four years, Apax Partners helped transform SuSE Linux AG into a European technology powerhouse, enabled it to become the partner of choice for companies like Intel and IBM and attracted new experienced senior management from the IT industry. It was the company’s successful growth story and market position that attracted Novell.