Temenos agrees Odyssey acquisition
28 September 2010 | 12208 views | 0
Temenos has inked an $81 million deal to buy Luxembourg-based Odyssey Financial Technologies, which provides application software to the private banking and wealth management (PWM) market.
The Swiss core banking vendor will pay $81 million, through a combination of existing cash and facilities but is also taking on Odyssey's existing debt obligations of $20.3 million.
The deal has already received sufficient irrevocable shareholder undertakings to be approved and is expected to close around the middle of October. It is earnings neutral for 2010, but is expected to be around six per cent accretive to earnings in 2011.
The acquisition sees Temenos add the Triple'A Plus and WealthManager products - installed at about 110 financial institutions - to its T24 Private Wealth offering. This will make it the clear market leader, with pro-forma annual revenues of around $130 million.
The vendor claims this market is likely to enjoy strong growth of around 25% CAGR between 2010 and 2012 as banks switch from in-house spending to third party licences in order to improve business responsiveness and organisational efficiency.
However, it also says the structural drivers underpinning growth in the PWM market are even more compelling with expanding high-margin private banking activities highly desirable for firms bidding to rebuild their balance sheets and achieve high returns in an era of lower leverage.
Meanwhile, customers and regulators are both demanding more transparency and simpler products, forcing banks to revisit their business models while the traditional offshore model is coming under pressure from collective government action to tighten tax avoidance.
Andreas Andreades, CEO, Temenos, says: "The combination of Temenos' Private Banking business and Odyssey creates a powerhouse in PWM application software - a business with the scale to out-sell and out-innovate competition and gain significant market share. The combination brings together the best-selling core banking platform with the best-selling front office applications, offering both sets of customers as well as new prospects an integrated yet best-of-breed back-to-front offering, which we believe will be a highly compelling proposition in the market.