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Big PE has designs on Aussie unicorn Envato – The Australian Financial Review

Australia’s software M&A outbreak is threatening to spill into private markets, with big American funds homing in Melbourne-based unicorn Envato.
Street Talk understands buyout giant Blackstone is among parties taking a close look, keen to work out what the company could be worth and whether it would be possible to prize it out of founder hands.
Big American software investors are swooping on Australia’s tech companies, and now attention is on unlisted unicorn Envato.  AFR
Sources said the interest was early, but it was strong enough to have attracted the attention of dealmakers in the United States and Australia. The big venture capital and private equity funds have tried to cosy up to the profitable Envato for years, although have been mostly kept at bay with the company funded only by its close knit founders and cash flows.
The lack of external funding means Envato’s success has widely gone unnoticed in wider capital markets, compared to usual list of unicorns like Culture Amp, Canva and Airwallex.
Envato operates a range of marketplaces and tools for creative workers, giving them access to creative assets like stock photos, graphic design templates, audio and fonts, as well as WordPress themes and code.
The group reported $US171 million revenue in the 2021 financial year – its most recently audited and lodged accounts – which was up from $US135 million in FY20. It was profitable in both years: $US11.6 million in 2021 and $US5.9 million in 2020.
The obvious question is why Envato’s owners – founders Cyan and Collis Ta’eed and Jun Rung, and Collis’ brother Vahid – would want to sell now?
Sure, financial and strategic buyers are crawling over Australia-founded tech companies, but valuations for listed businesses have been hit hard, which has put pressure on unlisted company valuations. Prior to the selldown, the Financial Review Rich List valued the business at more than $1 billion.
The last we heard from Envato in the middle of the year, when it laid off about 100 staff as it shifted focus from older assets to its newer subscription products.
As for Blackstone, its local team is not known for making software investments, however it has a big portfolio offshore. Its best known tech investments include dating app Bumble and digital family history company Ancestry.
Blackstone declined to comment on Thursday.
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