WSO2, a leading provider of API management and identity and access management (IAM) services for enterprises, has been acquired by EQT, a Swedish investment giant. While the terms of the deal were not disclosed, sources familiar with the matter revealed that the acquisition values WSO2 at over $600 million. EQT will obtain a significant majority stake in WSO2 through this transaction.
One of WSO2’s core offerings is an open-source API manager, similar to Google’s Apigee, which enables businesses to build and integrate their digital services on-premises or in the cloud. Additionally, WSO2 provides API management specifically tailored for Kubernetes and its flagship Identity Server, which functions as an identity and access management solution, akin to Okta. These products help companies manage identity and access functionality in their applications, including single sign-on (SSO).
Founded in 2005 in Sri Lanka, WSO2 has raised approximately $130 million in funding from prominent investors such as Intel, Cisco, and Goldman Sachs. Its most recent funding round, a Series E round, raised $93 million in 2022. Although an official valuation was never announced, reports indicated that the company’s valuation exceeded $600 million at the time of the funding round. While this suggests a relatively stagnant valuation for WSO2, it’s important to consider that the “more than” aspect of the recent acquisition deal might indicate some movement in the company’s valuation.
WSO2 co-founder and CEO Sanjiva Weerawarana has established a strong reputation in the open-source community, particularly through his involvement with Apache Software Foundation projects. He played a key role in designing the cloud-native Ballerina programming language. Furthermore, since 2017, Weerawarana has been driving for Uber, aiming to challenge societal norms and promote social acceptance in Sri Lanka.
Although WSO2 maintains a presence in the United States, with its headquarters in Santa Clara and several senior leaders in the country, the majority of its workforce is based in Sri Lanka. Weerawarana himself is located in the capital city, Colombo. This global distribution aligns with the ethos of open-source companies, which often prioritize decentralization and collaboration across different regions.
Interestingly, the acquisition of WSO2 was executed by EQT’s subsidiary, EQT Private Capital Asia. In 2022, EQT acquired Baring Private Equity Asia and rebranded it as EQT Private Capital Asia, serving as its private equity vehicle for the Asian market. This strategic move demonstrates EQT’s focus on expanding its presence in Asia.
EQT Private Capital Asia partner Hari Gopalakrishnan emphasized that WSO2’s global customer base, which includes renowned companies such as AT&T, Honda, and Axa, played a crucial role in the investment decision. Moreover, as cloud computing and artificial intelligence drive the demand for robust security infrastructure, WSO2 emerges as an attractive proposition for EQT, given their recent activity in the enterprise software space.
EQT anticipates that the acquisition of WSO2 will be completed in the second half of 2024. This deal positions WSO2 to capitalize on long-term trends like digital transformation and the increasing adoption of Generation AI (GenAI) technologies. With EQT’s support and resources, WSO2 is well-positioned to expand its market presence and further enhance its offerings in API management and identity and access management services for enterprises worldwide.