22 Jan 2016 07:00
22 January 2016
StatPro Group plc
Acquisition of Investor Analytics
StatPro Group plc (AIM: SOG), the AIM listed provider of portfolio analysis and asset pricing services for the global asset management industry, has acquired the entire share capital of Investor Analytics LLC ("IA"), the US-headquartered, cloud-based risk analytics company to hedge funds and asset managers, for a cash consideration of $10 million. There is an additional contingent payment of up to $6 million, payable after one year, which is dependent on securing a number of new contract wins.
Highlights:
· Complementary Risk Factor and Monte Carlo models to add to StatPro's Historical Simulation risk model
· Significantly increases StatPro's US presence, enhancing geographical reach
· Annualised Recurring Revenue ("ARR") of $4.85 million (£3.3 million)
· Increases StatPro's cloud-based ARR to 35% of total Group ARR from 27%
· Expected to be earnings enhancing in 2016 on a pro-forma basis following completion of the integration programme
· 53 client contracts - all new client relationships for StatPro
· Cash consideration:
o $7 million on closing
o Two deferred payments - $2 million after one year and $1 million after two years
o Additional contingent payment - up to $6 million after one year, dependent on securing a number of new contract wins
Based on unaudited results for the year ended 31 December 2015, IA is expected to report revenue of $5.0 million (of which approximately 94% was recurring) and an EBITDA loss of approximately $0.3 million. IA currently has 53 client contracts with ARR of $4.85 million (£3.3 million).
Cost synergies are expected to be approximately $1.0 million per annum (£0.7 million) for data feeds, administrative services and other costs. StatPro is targeting a run-rate adjusted EBITDA for IA of approximately US$0.5-$0.75 million (£0.35-£0.5 million) in the first 12 months following its acquisition.
StatPro expects to report an exceptional cash charge of between $1.0-$1.5 million (£0.7-£1.0 million) covering transaction fees and other one-off integration costs.
StatPro is financing the transaction from increased debt facilities provided by the Technology Finance division of Wells Fargo Capital Finance. The debt facility has been increased to approximately £24.5 million, of which £17.0 million is committed.
Justin Wheatley, Chief Executive of StatPro, commented:
"This earnings enhancing acquisition brings an excellent complementary cloud-based risk service which strengthens and broadens our product and service offering globally.
"IA also brings a highly professional team, new clients and provides greater market penetration into the important US market.
"IA is expected to make a positive contribution to our financial performance in 2016, following a swift integration into our business."
Damian Handzy, Chief Executive of Investor Analytics commented:
"We are delighted to join StatPro, as our services, technologies and cultures fit together seamlessly. Both firms' clients will immediately benefit from the combination of StatPro Revolution's best in class performance measurement with IA's comprehensive risk analysis.
"Together, we will offer the premium cloud-based performance / risk solution to the investment management industry and I look forward to working with Justin and Dario on bringing ever more valuable analytical services to market."
StatPro will be publishing its trading update for the year ended December 2015 on Friday 29 January 2016.
Background and reasons for the acquisition
StatPro's strategy is focused on growing its cloud-based portfolio analytics service, StatPro Revolution, and increasing its global reach.
Specifically, IA fills a functional gap in StatPro Revolution, providing factor-based risk, variance / covariance and Monte Carlo risk models. These new models, when combined with StatPro's Historical Simulation Risk Model, offer a complete suite of models for the risk requirements of any asset manager.
In particular, StatPro expects that its Equity focused asset management clients will wish to subscribe for the additional functionality. Since IA's technology is cloud-based, StatPro anticipates the integration of IA's service within the StatPro Revolution platform will be straightforward and achievable in a short time-frame.
Once IA is integrated with StatPro Revolution, all existing clients on the platform will be effectively fully implemented, meaning that an existing StatPro Revolution client seeking to add an IA subscription will be able to use the service immediately. StatPro expects that this highly simplified and automated implementation will enable cross selling of IA to StatPro Revolution clients.
Most of IA's current clients are U.S. based, and so the acquisition will also greatly strengthen the Group's position in the US market and should result in approximately 22% of Annualised Recurring Revenues coming from the US, post-transaction. The increased client base and additional workforce offers a better opportunity for expansion.
IA will be accounted for as part of StatPro Revolution's cloud-based revenue with immediate effect.
Sonenshine Partners LLC served as M&A advisor to StatPro on this acquisition.
Enquiries:
StatPro Group plc |
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Justin Wheatley, Chief Executive |
| +44 (0) 20 8410 9876 |
Andrew Fabian, Finance Director |
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Panmure Gordon - Nomad and Broker |
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Corporate Finance - Freddy Crossley / Fred Walsh |
| +44 (0) 20 7886 2500 |
Corporate Broking - Tom Salvesen |
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Instinctif Partners |
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Adrian Duffield / Lauren Foster |
| +44 (0) 20 7457 2020 |
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Sonenshine Partners - M&A Advisor |
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Cyrus Deboo / John Fang |
| +1 212 994 3330 |
About StatPro
StatPro is a global provider of award winning portfolio analytics solutions for the investment community. The Group's cloud-based platform provides vital analysis of portfolio performance, attribution, risk and compliance. This multi-asset class analytics platform helps StatPro's clients increase assets under management, improve client service, meet tough regulations and reduce costs.
The Group's integrated and global data coverage includes over 3.2 million securities such as equities, bonds, mutual funds, FX rates, futures, options, OTCs, sector classifications and much else besides. StatPro also covers most families of benchmarks including MSCI, FTSE, Russell, NASDAQ and the licence free Freedom Index.
StatPro has grown its Annualised Recurring Revenue from less than £1 million in 1999 to around £32 million today. The Group has operations in Europe, North America, South Africa, Asia and Australia, with hundreds of clients in 37 countries around the world. Approximately 80% of recurring revenues are generated outside the UK. StatPro Group plc shares are listed on AIM.
About Investor Analytics
Damian Handzy, CEO and Founder, established IA, in 1999 using cloud-based technology from the outset. IA is head-quartered in New York, USA, currently has 53 clients, and is a leading supplier of risk analytics using a number of methodologies.
Further information is given on their website: http://www.investoranalytics.com/