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First Derivatives to buy cash-strapped Cognotec

03 February 2010  |  6740 views  |  0 Buy Road sign

Capital markets tech house First Derivatives has struck a deal to buy Cognotec, the Irish FX dealing systems provider that went into receivership last week. Financial terms have not been revealed.

Cognotec has been operating for nearly 20 years, employing some 65 people with offices in Dublin, London, New York and Tokyo.

However, its business stuttered during the economic downturn and last week Barclays Bank, which is owed some $9 million from a $12.5 million loan advanced in 2006, appointed Kieran Wallace of KPMG in Dublin as receiver.

In pushing through the sale, Wallace had first to seek a court order overturning a prior agreement relating to the transfer of intellectual property rights in Cognotec's software to a Gibraltar-based firm, Syndicated Capital Investments, set up by Cognotec founder Brian Macabba.

First Derivatives has now entered an exclusivity agreement with Wallace to buy the failed company.

It says it will make "significant investment" in the Cognotec product portfolio, which includes RealStream, a suite for managing FX margins, rates and liquidity, as well as AutoDeal+, an FX pricing and execution engine. The company has not yet provided details on plans for staff.

Brian Conlon, CEO, First Derivatives, says: "First Derivatives will extend Cognotec's product and service capabilities significantly, through increased investment in R&D, together with the cross pollination of intellectual property and expertise in capital markets. First Derivatives has a strong track record of acquiring niche capital markets technology companies and significantly expanding their operations through investment and leverage of synergies with its business."

Founded in 1996, Northern Ireland-based First Derivatives has made several acquisitions recently and now employs 400 people worldwide. In October it bought New Jersey-based data management outfit the Reference Data Factory for an initial consideration of $2.5 million, with an additional $7.5 million reserved for earn-out provision. This followed a deal to take a 15% interest in Californian analytical database vendor Kx Systems for $7.5 million.

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