Independent enterprise software support provider Rimini Street will soon be a publicly traded company, but via a merger and not with a long-expected initial public offering. The move stands to give Rimini the capital it needs for expansion.
Under the arrangement, Rimini Street will merge with GP Investments Acquistion Corp. The latter will be renamed Rimini Street and continue trading on NASDAQ, but with the ticker symbol RMNI. The deal will have an initial enterprise value of $837 million. Rimini Street founder and CEO Seth Ravin, who will lead the combined company, laid out the rationale for the deal in a statement:
"The combination with GPIAC will provide Rimini Street additional growth capital to expand service offerings and capabilities, strengthen our balance sheet and fund potential acquisitions," said Mr. Ravin. "We believe that having a public company structure will further fuel our growth by facilitating additional sales opportunities and providing additional capital market access."
Rimini is the most prominent third-party support vendor in the market. Founded in 2005, the company has offered software support for Oracle, SAP and other products at half the price of vendor-provided maintenance, while claiming superior service.
It has experienced steady growth even while battling litigation brought against it by Oracle, which alleges Rimini's business model infringed on its intellectual property. That case, as well a suit Rimini filed against Oracle aren't yet resolved, but the specter of litigation apparently wasn't a deal-breaker for GPIAC. (Nor has it been for customers, given Rimini's advancement in the market).
Third-party maintenance appeals to customers with stable systems and little desire to upgrade to newer versions as vendors release them. The option has long been a pillar of Constellation Research's Software Bill of Rights.
While Rimini has reported annual run-rate revenue of $196 million, that remains a tiny fraction of the total addressable market for on-premise maintenance, which the company estimates at $81 billion.
"I think this [merger] gives Rimini a huge opportunity to expand," says Constellation Research founder and CEO R "Ray" Wang. "More importantly, they can increase their speed in go-to-market."
Rimini's emergence as a public company could have a ripple effect, emboldening more players to enter the business, while prompting competitive responses from incumbent software vendors. Overall, the move looks like a good one not only for Rimini, but enterprise software customers.
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