EQT snaps up API and identity management software company WSO2 for more than $600M

WSO2, a company that provides API management and identity and access management (IAM) services for enterprises, has been acquired by Swedish investment giant EQT.

Terms of the deal were not disclosed, but TechCrunch has learned via sources that the deal values WSO2 at “more than” $600 million, with EQT attaining a “significant majority” stake for the price.

WSO2’s products include an open source API manager, comparable to something like Google’s Apigee, which businesses use for building and integrating all their digital services, either in the cloud or on-premises. The company offers tangential services such as API management specifically for Kubernetes, as well as its flagship Identity Server — a little something like Okta — that companies use for managing identity and access functionality in their apps, such as single sign-on (SSO).

WSO2, which was founded out of Sri Lanka in 2005, had raised around $130 million in funding from the likes of Intel, Cisco and Goldman Sachs, with its most recent tranche coming via a $93 million Series E round in 2022. An official valuation was never announced, but articles from some outlets at the time reported a valuation of more than $600 million. So that would mean WSO2 has remained somewhat stagnant, though the “more than” facet here could disguise some movement in the company’s valuation.

A strong track record

WSO2 co-founder and CEO Sanjiva Weerawarana has a strong track record in the open source sphere, particularly among Apache Software Foundation projects, and he was one of the main designers of the cloud-native Ballerina programming language. Since 2017, Weerawarana also drives for Uber, which he says is designed to “challenge the norm” and make it more socially acceptable in his native Sri Lanka.

WSO2 is a fairly well-distributed company, in keeping with the ethos of other businesses founded around open source. While the company counts a U.S. HQ in Santa Clara, and many of its senior leadership team are spread across the U.S., its center of gravity lies in Sri Lanka where much of its workforce is located — including Weerawarana, who’s based in the capital Colombo.

With that in mind, it’s worth noting that the acquisition was actually made by an EQT subsidiary called EQT Private Capital Asia, formerly known as Baring Private Equity Asia, which EQT procured in 2022 for €6.8 billion to serve as its private equity vehicle for Asia.

With a global spread of customers that include AT&T, Honda and Axa, this is something that EQT Private Capital Asia partner Hari Gopalakrishnan says was a key part of its decision to invest. Moreover, with cloud computing and AI driving demand for security infrastructure, WSO2 was a particularly appealing proposition for an investment firm with recent form in the enterprise software space.

“Software is a key focus sector for EQT, and WSO2 is a strong company that has scaled globally with an enterprise customer base spread across the US and Europe,” Gopalakrishnan said in a statement. “[We] believe that the company is well-positioned to capitalize on long-term trends such as digital transformation and rising GenAI adoption.”

EQT say that it expects the acquisition to close in the second half of 2024.