Temenos is in superior discussions to purchase the UK’s Fidessa, because the Swiss banking software program group joins the combat to produce knowledge and buying and selling instruments to the world’s capital markets.
The corporate, which has a market capitalisation of SFr8.7bn, stated in a press release on Tuesday that it had proposed an all-cash supply value £36.467 per Fidessa share, valuing the UK enterprise at greater than £1.3bn.
Fidessa shares soared greater than a fifth to an all-time excessive of £36, giving it a market capitalisation of greater than £1.4bn. Temenos shares fell greater than 6.5 per cent to SFr114.30, as analysts fearful a deal would curb the corporate’s development.
The supply is the newest high-profile deal within the buying and selling and know-how market in latest months. In January, Blackstone unveiled a $17.3bn move for the terminals and knowledge companies of Thomson Reuters, a couple of months after Ion Funding Group, backed by Carlyle Group, agreed to purchase OpenLink and a controlling undisclosed stake in Dealogic.
Temenos primarily provides software program to allow the each day operations of retail and company banks, equivalent to funds, threat monitoring and fund and securities administration.
Fidessa competes with Reuters in offering market knowledge and commerce processing for a whole lot of funding banks and fund managers worldwide.
Analysts stated the bid might kick off a bidding battle for Fidessa, one of many “grandfathers” of the UK monetary know-how market, particularly from personal fairness corporations.
Shaped within the early 1980s, Fidessa’s fast development earlier than the monetary disaster slowed within the subsequent decade as its clients consolidated and regulation got here into pressure that restricted the buying and selling actions of its funding banking clients.
Nevertheless, shares hit a file excessive after the corporate reported full-year outcomes on Monday, with analysts forecasting that margins might enhance from 2019 when present spending to arrange for Mifid II rules and a transfer into the derivatives market slows.
Fidessa stated its board would suggest the bid to shareholders if a agency supply was made.
Analysts had been divided on the deserves of any deal.
Panagiotis Spiliopoulos at Vontobel stated an acquisition was a “sensible strategic transfer as it will considerably develop the addressable marketplace for Temenos into buying and selling, funding administration and capital markets”.
Berenberg’s Josep Bori stated a deal would “make strategic sense” as Temenos has lengthy seemed to develop past its core banking experience. Its Fidessa bid comes six years after the corporate misplaced out in a battle to purchase Misys, a banking software program provider, to non-public fairness group Vista.
Neil Campling, an analyst at Mirabaud Securities, stated Fidessa’s sturdy money technology, excessive recurring revenues and debt-free stability sheet “tick all of the packing containers for personal fairness”.
He added that it will be an costly acquisition as a result of Fidessa has decrease development and working margins than its Swiss rival. “The attraction financially can be extra suited to non-public fairness than a development firm equivalent to Temenos,” he stated.
Extra reporting by Nic Fildes
Fidessa: a UK fintech pioneer
Fidessa is a pioneer in buying and selling software program and has developed a powerful fame for supplying knowledge and infrastructure to dozens of the world’s greatest funding banks and fund managers.
The UK firm was based within the early 1980s below the identify Intercom Knowledge Programs as computer systems started to infiltrate inventory markets. After rebranding as Royalblue it took on the moniker of its foremost buying and selling platform, Fidessa, in 2007. At that time, simply earlier than the monetary disaster, it recurrently recorded annual income and revenue will increase in extra of 20 per cent.
Nevertheless, it has had years of single-digit development as its financial institution and fund supervisor clients failed, merged or pressed for charge cuts. In response, Fidessa has pushed into new markets like derivatives and Asia and analysts have recurrently backed the inventory for the reliability of its earnings.