TIDMSOG
RNS Number : 6498M
StatPro Group PLC
22 January 2016
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 (GBP3.3 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 (GBP3.3 million).
Cost synergies are expected to be approximately $1.0 million per
annum (GBP0.7 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 (GBP0.35-GBP0.5 million) in
the first 12 months following its acquisition.
StatPro expects to report an exceptional cash charge of between
$1.0-$1.5 million (GBP0.7-GBP1.0 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 GBP24.5 million, of which GBP17.0 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
Justin Wheatley, Chief +44 (0) 20
Executive 8410 9876
Andrew Fabian, Finance
Director
Panmure Gordon - Nomad
and Broker
Corporate Finance - Freddy +44 (0) 20
Crossley / Fred Walsh 7886 2500
Corporate Broking - Tom
Salvesen
Instinctif Partners
Adrian Duffield / Lauren +44 (0) 20
Foster 7457 2020
Sonenshine Partners - M&A
Advisor
+1 212 994
Cyrus Deboo / John Fang 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 GBP1 million in 1999 to around GBP32 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/
This information is provided by RNS
The company news service from the London Stock Exchange
END
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