Temenos buys into funds market with €235m purchase of Multifonds
Temenos has moved into the fund administration business with the acquisition of Multifonds, which counts a number of Tier 1 institutions as users of its fund administration platform.
Temenos is paying €235 million in a mixture of cash and debt to acquire Multifonds from a shareholder group led by growth equity investor Summit Partners. It says the acquisition will give it “additional scale, access to highly complementary products, client relationships with more than 30 of the world’s largest financial institutions, and exposure to the fast-growing fund administration market”.
Luxembourg-based Multifonds operates predominantly in the third-party fund administration market. Its software allows fund administrators to perform key accounting functions such as intra-day valuations and end-of-day NAV calculations as well as to support fund administrators in key investor servicing and transfer agency functions such as investor dealing and shareholder record keeping.
While assets under management are growing by around 7% a year, fund managers face increasing margin pressure that has led to increased use of third-party administrators who have the scale to operate at lower costs, or to reduce their infrastructure costs by investing in scalable IT platforms.
Multifonds’ global platform for fund administration has won the Banking Technology Readers’ Choice Awards several times, including last year.
Among its clients are JP Morgan, Citi, BNP Paribas and Credit Suisse. The addition of the Multifonds platform thus adds a highly complementary product line to the Temenos portfolio, allowing Temenos to offer a broader, more compelling solution to new and existing customers. In particular, the combined proposition of Temenos’ securities processing, custody and enterprise data management functionality with Multifonds’ fund accounting platform creates a complete, integrated solution for the fund management industry.
Following the acquisition, Oded Weiss, chief executive of Multifonds, will continue to run the company along with its current management team. He will also join the Temenos senior management team.
The acquisition of is expected to make a material contribution to Temenos’ revenues, profits and earnings per share. Multifonds is expected to contribute non-IFRS revenues of around $46 million in 2015 of which more than 60% will be recurring revenues. Multifonds has been growing total revenues at around 10% per annum over recent years. Temenos expects to incur restructuring charges of $11 million relating to this acquisition, the earlier acquisition of Akcelerant and other cost rationalisation activities across the group.
“This represents a highly strategic investment for us,” said David Arnott, chief executive of Temenos. “Temenos now has best-of-breed software spanning private and wealth management, retail banking, transaction banking, compliance and fund administration, enabling us to offer a broad solution to meet our customers’ needs. Further, we achieve a greater level of scale with a higher proportion of recurring revenues, which will give us the size and the predictability to accelerate strategic investments to grow the overall business.”