IBM strikes $387 million deal to acquire Algorithmics

IBM strikes $387 million deal to acquire Algorithmics

IBM has stepped up its investment in the booming risk management marketplace with a $387 million deal to buy Toronto-based analytics house Algorithmics.

The deal, expected to close in October, positions IBM at the forefront of the risk analytics marketplace, as financial services companies struggle to assimilate and evaluate transactional information flows under the scrutiny of global regulators.

More than 350 clients, including 25 of the top 30 banks and more than two-thirds of the CRO Forum of leading insurers, use Algorithmics' analytics software and advisory services. Clients include The Allianz Group, BlueCrest, HSBC, Nedbank, Nomura, Societe Generale, and Scotia Capital.

The Canadian risk outfit employs 900 staff worldwide and generated revenue of $163.7 million in 2010.

Rob Ashe, general manager, business analytics, IBM, says the acquisition expands IBM's capabilities in the financial services industry by helping firms quantify, manage and optimise their risk exposure across a range of financial risk domains including market, liquidity, credit, operational and insurance risk as well as economic and regulatory capital risk.

"Combining Algorithmics' expertise with IBM's deep analytics portfolio will allow clients to take a more holistic approach to managing risk and responding to economic change across their enterprises," he says.

In five years, IBM has spent more than $14 billion on 25 acquisitions focused on analytics.

It is expected that Algorithmics' risk analytics software and services will be combined with the OpenPages suite of applications acquired by IBM in September last year. OpenPages software tracks operational risk, financial controls management, IT risk, compliance and internal audits to provide an aggregated, enterprise-wide picture of all exposures

Ashe says that Algorithmics' focus on credit, market and liquidity risk, as well as key customers in operational risk, will also help to strengthen and expand IBM's risk consulting services.

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