SAP’s logo is seen on their offices in Reston, Virginia, U.S., May 12, 2021. Picture taken May 12, 2021. REUTERS/Andrew Kelly

LONDON, May 3 (Reuters) – German software company SAP (SAPG.DE) is working with investment bank Moelis & Co (MC.N) to sell its enterprise learning software business Litmos as it is looking to streamline its operations and focus on the cloud. income based, three sources told Reuters.

The sale of profitable California-based Litmos could fetch a valuation of more than $1 billion, said the sources, who spoke on condition of anonymity because the matter is private.

Moelis is expected to launch an auction process in the coming weeks and will primarily target technology-focused private equity funds in the United States and Europe, two of the sources said.

Representatives for SAP and Moelis declined to comment.

SAP bought Litmos as part of its $2.4 billion acquisition of US cloud software company Callidus in 2018, renaming the SAP platform Litmos.

The company provides learning platforms for enterprise customers to develop sales and customer service, and is used by more than 30 million people in 150 countries, according to its website.

The sources said Litmos overlaps with SAP SuccessFactors, a human experience management suite learning platform promoted by SAP. Although both are cloud-based solutions, Litmos is compatible with a variety of HR systems such as ADP and BambooHR, while SAP SuccessFactors focuses on training users to use its own platform.

SAP Chief Financial Officer Luka Mucic told reporters on a recent call that SAP wanted to streamline its operations — including divestments — to focus on growth drivers.

Moelis helped SAP with a previous divestiture in 2020 when the German software giant sold Digital Interconnect (SDI) to Swedish cloud communications company Sinch (SINCH.ST) for around $250 million.

SAP listed its experience management software company Qualtrics (XM.O) in the United States last year, remaining its majority owner.

CEO Christian Klein is reviewing SAP’s portfolio with the intention of moving to subscription-based services and increasing cloud-based revenue.

Reporting by Emma-Victoria Farr and Krystal Hu, additional reporting by Nadine Schimroszik, editing by Pamela Barbaglia, Jason Neely, Alexandra Hudson

Our standards: The Thomson Reuters Trust Principles.