Sky News has learnt that Hg Capital, the private equity firm, has hired bankers to sell Iris, one of the UK’s largest privately owned software businesses.
Sources said the long-awaited sale process, which will be handled by Arma Partners, a technology and media-focused investment bank, was likely to attract interest from larger buyout firms and rival software companies.
Iris specialises in providing accounting and payroll software to clients which include the Royal Opera House and Bellway Homes.
It has seen revenues and profits surge over the last decade.
Hg has held a stake in Iris for 14 years, seeing the company through a string of takeover deals which have netted it several windfalls.
Its payday from selling Iris this year will be by far its largest to date, however, having reinvested in the Berkshire-based company in 2011.
Iris is expected to be a particularly enticing takeover target because it enjoys profit margins of close to 50%, excluding investments the company has made in a new cloud-based software division.
More than 80% of its revenues are generated by subscriptions, meaning that it also benefits from predictable cashflows.
Hg is a long-term investor in the software industry, participating last year in a £4.2bn takeover of Visma, a Norwegian software company – the largest such transaction involving the firm.
Hg and Arma both declined to comment on Tuesday.