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Screenshot of a breaking news alert e-mail from Q2 2017
Israeli electronic payment solutions provider Fundtech has been acquired for over three times the value of its previous acquisition just four years ago.
Clal Industries Ltd (TLV:CII) offloaded Fundtech for only $390 million in 2011, however just four years later in March 2015, the firm has been sold to Canadian financial technology company DH Corp (TSE:DH) for a remarkable $1.25 billion.
DH Corporation is listed on the Toronto Stock Exchange, and according to Israeli financial news source Globes, has a market cap of approximately (CAD) $3.4 billion, which equates to approximately $3.7 billion US dollars.
In this transaction, the firm selling Fundtech is US private equity fund GTCR, whose investment in the company has been spectacularly successful. GTCR acquired its controlling interest in Funtech mainly from Clal Industries, a subsidiary of IDB DEVELOPMENT ORD SHS (TLV:IDBD), then controlled by Nochi Dankner.
Back in 2011, Clal relinquished its shares in Fundtech for $200 million, making a 412 million shekel ($103 million) gain on the transaction by selling the firm to GTCR, an exit deal which pales into insignificance when considering that just four years later, the firm has been sold for over three times its 2011 value.
Fundtech was founded in Israel by CEO Reuven Ben Menachem, who led the company before and after its sale to GTCR. Under the new ownership, Mr. Ben Menachem is likely remain with the company after its acquisition by DH Corporation, but in a consultancy capacity rather than as CEO. The company operates within the financial sector as well as certain other industries, however a substantial number of FX firms use its services.
“I’m very proud of the company and the culture that we have built, and believe that the DH’s philosophy of focusing on the customer and its expertise in the financial technology industry constitute an excellent strategic match for us. Fundtech’s joining DH will create new opportunities for our employees and customers,” Mr. Ben Menachem said in an interview with Globes.
One of the major developments that Fundtech provided to the FX industry came in February 2013, when it announced that North American FX institution PNC would begin offer seamless FX transaction processing through Fundtech’s United States federal wire system.
Banks using Fundtech’s PAYplus USA became able to offer their commercial clients the convenience of integrated real-time FX payment processing using PNC Bank as their correspondent.
As a result of this, banks and their clients became able to receive dynamic real-time FX rates from PNC that are competitive with up-to-the-minute exchange pricing, this representing an early development in this direction.
In October last year, the firm made significant enhancements to its global payment services hub solution, Global PAYplus. The enhancements include new business capabilities, and improved usability and performance. These new developments reflect Fundtech’s ongoing commitment to ensuring the solution is configurable, flexible, and customer-focused, allowing customers to save time, reduce errors, improve business decision-making, and reduce costs.