The reasoning behind this deal and the flurry of other travel tech investments lately is simple: the more valued data and analytics models these companies provide are eminently scalable.

The rising numbers of global air travelers and the accompanying demands by carriers for greater levels of technology and data appear to be the driving forces behind Warburg Pincus’ sale of airline analytics software provider Accelya to Vista Equity Partners.

Terms of the deal weren’t disclosed. In a joint news release by Accelya and Vista’s permanent capital investment fund, Perennial, noted the transaction still requires pending regulatory approval in a number of countries where they both operate in.

PE Parents

Barcelona-based Accelya was founded in 1976. It was acquired by Warburg in Feb. 2017  in a debt financing valued at $720 million (650 euros, according to various news reports at the time) from French PE firm Chequers Capital. Chequers bought the airline analytics company in 2007. At that point in its existence, Accelya operated as ADP Clearing and was owned by U.S.-based human resources and business solutions company Automatic Data Processing (ADP).

After Warburg acquired Accelya, the PE firm quickly merged it with its Dubai-based travel and transport tech provider Mercator with the intention of creating “a leading global technology-enabled solutions provider to airlines, travel agents and freight forwarders.”

Among the holdings Mercator came to Warburg with was the unit formerly branded as Revenue Management Systems Inc., whose airRM software has long served competitive fare and pricing data to airline clients. RMS was founded in 1996 in Seattle and was itself bought by Mercator in April 2016. It had about 70 airline clients at the time.

Accelya’s client roster currently consists of about 200 airlines, including British Airways, Qantas, Air Canada, JetBlue Airways, Alaska Airlines, and Ryanair. Its operations and 2,500-sized workforce are spread across 14 countries.

This deal was Perennial’s first acquisition. The Vista subsidiary fund is focused “on growing industry-leading vertical software companies through long-term investments in product expansion and feature enhancement.”

“Accelya is at the forefront of innovation and positioned to shape the airline and travel industry for decades to come, making it an exceptional first investment for Vista’s Perennial Fund,” said Robert F. Smith, Founder, Chairman, and CEO of Vista. “We look forward to working with [Accelya CEO John Johnston] and the talented management team at Accelya to identify further opportunities for growth as they continue to serve the leading airlines, travel agents, and shippers across the world.”

The companies had no further comment on the transaction, which was first reported by Reuters.

Hot Investment Of 2019: Travel Tech

For Warburg, it clearly put a lot into Accelya – and the returns, especially after the combination with Mercator, were fairly significant and relatively swift. The NYTimes reported that the blending of Mercator with Accelya led to a tripling of the latter’s revenues in the first few months of the arrangement.

With all that in hand, Warburg may have considered the current interest in travel technology investments as a perfect time to strike a deal and concentrate elsewhere. Warburg hired Bank of America in August to scout out potential buyers for Accelya, Reuters reported at the time, citing unidentified sources as suggesting the company could be valued at up to$1.67 billion (1.5 billion euros).

While Accelya’s business is long established, its position as a major provider of airline data and software should be considered within the current investment rush into travel tech. According to Phocuswright's 10th annual State of Startups Report, there was a 55 percent rise ($5.7 billion) in financings in the space from. 2018 to 2019.

That $5.7 billion number comprises roughly a third of the $19.7 billion that has been raised by travel tech brands over the last decade, the Phocuswright report stated.

The drive behind all this investment is simple: air travel is expanding globally; legacy airline legacy systems are racing to enhance their existing platforms by either acquiring or striking lucrative alliances with travel tech startups; the more valued data and analytics models these startups provide are easily scalable.

“There's a lot of interesting technologies that can transform what has traditionally been an industry locked up by legacy systems,” Amy Burr, JetBlue Technology Venture’s managing director of operations and partnerships, told Kambr Media this past spring when asked about the present flurry of deal-making in the travel space. “The ability to integrate technologies such as artificial intelligence and machine learning, as well blockchain and biometrics, into the industry’s traditional processes are what’s changing the game. There are a number of startups using these new technologies within travel and figuring out how to bridge the gap between newer emerging tech and old school systems.”