StatPro Group PLC (LON:SOG), a provider of portfolio analysis and asset pricing services for the global asset management industry, today announced that it has acquired the entire share capital of Investor Analytics LLC (“IA”), a 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 subject to securing a number of new contract wins.
The deal is expected to be earnings enhancing in 2016 on a pro-forma basis following completion of the integration program.
Cash consideration:
- $7 million on closing;
- Two deferred payments – $2 million after one year and $1 million after two years;
- 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 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.
Most of IA’s current clients are U.S. based, and so the acquisition is seen to bolster StatPro’s position in the US market and should lead to 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.
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.”
You can view the official announcement on the deal by clicking here.