Banks Continue the Hot Trend of Embracing Transformation
Banks and other financial institutions continue the trend of intense M&A activity in July with several notable transactions. Financial services firms are adding software capabilities through acquisitions, while stand-alone financial technology companies are acquiring companies to expand their available solutions to different institutional clients. Financial companies have felt the need to improve upon their legacy systems to keep up in an ever-changing environment. Process optimization/transformation and market infrastructure technology has proven pivotal to surviving in today’s financial environment.
Another recent development is customers have come to expect more options and accessibility to all of their information. This has led to increased concerns among all financial firms, in both the U.S. and globally, where protecting their customers data has proven paramount given regulatory compliance. This development has increased the level of financial cyber security software purchased by multiple top financial companies.
Additionally, along with other top corporations, banks have acquired customer relationship management (CRM) software companies, and other lead generation systems, to thrive in an uber competitive space that has been interrupted by new and innovate competitors. Pharus believes the FinTech space will continue to consolidate due to these trends other technology innovative advances.
One of the most notable transaction occurred on July 20th, when State Street acquired Charles River Systems, a solutions provider to automate front and middle office investment management functions across asset classes on a single platform. The transaction values Charles River Systems at $2,600M, 8.4x Revenue, and 17.4x EBIT. The acquisition will provide additional options and solutions to State Street’s large and diverse cliental of wealth managers, investment managers, and other financial advisors.
On July 31st, SS&C Technologies, a provider of financial services software, acquired Eze Software Group, a developer of investment technology solutions to support front, middle, and back office needs worldwide, from TPG Capital, for its second billion-dollar deal this year. The transaction values Eze Software at $1,450M, 5.2x Revenue, and 13.8x EBITDA. The acquisition will provide SS&C clients with additional investment technology options to transform their own legacy platforms.
On May 15th, Deutsche Bank acquired Quantiguous Solutions, a developer of application programming interface (API) based software solutions and applications for banking and financial industry. The transaction will accelerate Deutsche Bank’s development of its Open Banking platform that forms the core for developing innovative client applications.