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An article relating to this blog post on Finextra:

Fidelity and Fiserv bidding for eFunds - report

Fidelity National Information Services and Fiserv have each bid more than $1.5 billion for US electronic payments firm eFunds, according to a Bloomberg report.


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First to leave the Finextra50

With market and sector indices, constituent companies come and go. We knew when we formulated the Finextra50 Index that we would no doubt soon be making adjustments due to the amount of M&A going on in the industry.

So who is going to be the first company to leave the index?

The Reuters-Thomson deal was on the radar when we created the index, but it turns out that the combined entity will retain the Reuters name for the financial and media business, and the dual listed entity will be known as Thomson-Reuters. So when the deal eventually completes, Reuters will remain a key constituent of the index in some form.

eFunds, on the other hand, looks like it may end up being acquired by one of two other Finextra50 constituents – Fidelity or Fiserv – or potentially some as yet unnamed suitor reported to be interested in the US payments vendor.

eFunds shares have risen rapidly since it reported in its last earnings announcements that it was looking to be acquired. But Citigroup recently downgraded it from a hold to a sell, citing an unattractive risk/reward profile with little or no upside at current prices and, significant downside if a deal doesn’t occur.

Another company that could leave our index is i-Flex, which is now approximately 81% owned by Oracle through Mauritius-based Oracle Global. Oracle’s intentions were clear last December when it increased its offer from Rs 1,475 to Rs 2,100 per share to bring its stake up the current levels. But analysts expect that it will need to tender between Rs 2,500 and Rs3,000 for the remaining shares, and it still has India’s restrictive de-listing rules to overcome if it wants to bring the core banking vendor into its newly formed financial services business unit.

Of course, another new deal could be announced and closed before any of these come to fruition. And we will also recalibrate the index towards the end of the year, when annual reports may reveal that some companies no longer meet the index requirements, such as percentage of revenue derived from sales to financial services organisations.

Watch this space.

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Comments: (1)

Elton Cane
Blog group founder
Elton Cane - News Corp Australia - Brisbane 21 June, 2007, 17:22Be the first to give this comment the thumbs up 0 likes

I just spoke with V Senthil Kumar, CMO of I-Flex, and Ashwin Goyal, VP Financial Services for Oracle, who are announcing today some of the first releases from the recently formed Oracle Financial Services Global Business Unit (FSGBU). Basically, driven by customer demand, they've released a process integration pack with ready-built integration between Sibel and Flexcube, and also made the latest version of Flexcube work with Oracle's access and identity mangement suite.

With Oracle's Q4 earnings announcement due next week they wouldn't be drawn on any speculation about completing the i-Flex acquisition, but they did talk about how beneficial it is for the FSGBU to have senior i-Flex people among the top management, as well as executives who came from the FS divisions of Siebel, PeopleSoft, and of course, Oracle.

But talking about Oracle's vision to achieve complete coverage across the financial services sector, they did admit that future acquisitions for the unit will likely be in the insurance and capital markets space, where their offerings aren't as complete as they are in banking.

Already they have (through i-Flex) compliance vendor Mantas, which has some capital markets specific modules for MiFID, and broker and mutual fund compliance. And this year's acquisition, data cache vendor Tangosol, pitches its products to enhance grid computing environments in capital markets firms. Any new acquisitions could add capital markets line of business applications to Oracle's current capabilities in high-performance  computing, business intelligence and reporting.