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An article relating to this blog post on Finextra:

Dubai buys SmartStream for £200m

The Dubai International Financial Centre (DIFC) - owner of the Dubai Stock Exchange - has agreed a deal to acquire British fintech vendor SmartStream Technologies for £200 million.


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Successful Private Equity Exit on SmartStream

As you may have seen, SmartStream, a leader in trade reconciliation and STP solutions for financial institutions, was acquired by DIFC Investments. 

Due to various confidentiality agreements, I cannot comment too much on this transaction but this was a very successful investment for us which furthermore demonstrates our strong track record in the financial technology sector (nearly 20 investments and counting...).

During our time as an investor (technically, we still are shareholders until completion in 30 days), the Company has grown in sales, license backlog, profits and employees; in addition, we have put in place a world-class management team led by Ken Archer who were also shareholders in the Company alongside us.

I think that this was a good example of how private equity firms can create value for shareholders, employees and customers alike by investing in growing fintech companies. The holding period was shorter than usual but we had never initiated a sales process. I will not comment on our returns but what you've seen in the press is a step in the right direction. :-)

What do you think of the transaction? How about the buyer? DIFC claims that they will be using SmartStream as a platform for clearing and settlement services. Good idea? Bad?

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Comments: (1)

Elton Cane
Elton Cane - News Corp Australia - Brisbane 15 November, 2007, 14:11Be the first to give this comment the thumbs up 0 likes

I hope DIFX has more luck than LCH.Clearnet in replacing its clearing and settlement system. (see this Computer Weekly article for a post-mortem of that disaster).

As a relatively new exchange (since 2005) DIFX doesn't have much in the way of legacy systems to deal with, which should make things easier. It was originally going to outsource clearing and settlement to LCH.Clearnet, but in the end it went with eClearSettle, a solution from Indian vendor firm Tata Consultancy Services, which I believe is still running it on an outsource contract.

While SmartStream's Trade Process Management solution has been deployed for clearing and settlement in sell-side, buy-side and custodian environments, I don't think it has ever been deployed by an exchange, particularly one that also acts as a CSD. I'm not sure how much change would be required to the solution over and above the normal customisation required on any SmartStream implementation. But given SmartStream's recent hosted recs partnership with TCS, I wouldn't be surprised to see the two companies working together on the new infrastructure for DIFX.

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Private Equity Investing in Financial Technology

A community for discussing investments made in financial technology providers by the venture capital and private equity community.


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