Private equity group Warburg Pincus has acquired a 35% stake in Avaloq, valuing the Swiss core banking firm at CHF1 billion.
With a client list comprising of 155 banks and wealth management firms and a joint venture with Raiffeisen in Switzerland serving 270 banks, Avaloq says the transaction is the first step towards a potential public listing "in the coming years".
The company has over 2000 employees and runs three R&D centres in Zurich, Edinburgh and Manila and three BPO centres in Lugano, Singapore and Berlin.
The deal comes on the back of a strong set of results for the firm, which generated full year revenues of CHF533 million in 2016, an increase of 10% on a reported basis from CHF485 million in the previous year. Earnings before interest, taxes, depreciation and amortisation (EBITDA) increased 41% to CHF82 million from CHF58 million in 2015.
As part of the transaction, Avaloq founder and CEO Francisco Fernandez will also assume the role of chairman. Jürg Hunziker will serve as deputy CEO and group chief markets officer (CMO).
Says Fernandez: “I am delighted to welcome Warburg Pincus as shareholders in Avaloq and look forward to partnering with them as we accelerate the growth of the business. Their global presence, in the US, Europe and years of experience in Asia, combined with their extensive experience in financial services and software, and large network in the broader banking and wealth management industry will be invaluable as we enter a new stage in the development of Avaloq and its geographic expansion."
Warburg Pincus has built up a rich portfolio of financial services and technology companies, having invested over $10 billion in the sector. Notable investments include AllFunds Bank, Arch Capital, China Huarong Asset Management, FIS/Metavante, HDFC, Interactive Data Corporation, Mellon Bank, Network International, Elavon, Sterling Financial Corp, Santander Consumer USA, Wall Street Systems, and Webster Bank.
The transaction is expected to close in the second quarter and has a seven-year investment horizon.