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Temenos acquires Multifonds to broaden banking software portfolio
Temenos Group has bought Multifonds, a leading global provider of fund administration software. The acquisition will give Temenos additional scale, access to highly complementary products, client relationships with more than 30 of the world’s largest financial institutions
The Asset 5 Mar 2015
Temenos Group has bought Multifonds, a leading global provider of fund administration software. The acquisition will give Temenos additional scale, access to highly complementary products, client relationships with more than 30 of the world’s largest financial institutions, and exposure to the fast-growing fund administration market.
 
Following the acquisition, Temenos now provides mission-critical software to 38 of the top 50 banking institutions in the world. Temenos is paying 235 million euro to acquire Multifonds from a shareholder group led by growth equity investor Summit Partners. The transaction is being funded through a mixture of cash and debt.
 
Founded in 1995 and headquartered in Luxembourg, Multifonds provides software to financial services institutions globally, predominantly in the third-party fund administration market. Multifonds’ software allows fund administrators to perform key accounting functions such as intra-day valuations and end-of-day NAV calculations as well as to support fund administrators in key investor servicing and transfer agency functions such as investor dealing and shareholder record keeping. Multifonds has over 470 employees in 14 offices globally.
 
 In common with the overall financial services sector, the fund administration market is undergoing significant change creating a structural need for third-party software. While assets under management are growing by around 7% per annum on the back of growing global wealth, fund managers’ margins are under pressure leading them either to use third-party administrators, who have the scale to operate at lower costs, or to reduce their infrastructure costs by investing in scalable IT platforms.
 
The acquisition of Multifonds reinforces Temenos’ position as the leader in mission-critical software for financial institutions as well as providing significant opportunities for operational synergies. Multifonds’ global platform for fund administration is used by a host of tier 1 financial institutions, such as J.P. Morgan, Citi, BNP Paribas and Credit Suisse.
 
The addition of the Multifonds platform thus adds a highly complementary product line to the Temenos portfolio, allowing Temenos to offer a broader, more compelling solution to new and existing customers. In particular, the combined proposition of Temenos’ securities processing, custody and enterprise data management functionality with Multifonds’ fund accounting platform creates a complete, integrated solution for the fund management industry.
 
Following the acquisition, Oded Weiss, CEO of Multifonds, will continue to run the company along with its current management team. In addition, he joins the Temenos senior management team.
 
 
 
The acquisition of Multifonds, which is due to close on March 5, is expected to make a material contribution to Temenos’ revenues, profits and earnings per share (EPS). Multifonds is expected to contribute non-IFRS revenues of around US$46 million in 2015 (US$56 million on a pro-forma basis), of which more than 60% will be recurring revenues.
 
In 2015, the acquisition will contribute around US$15 million to group non-IFRS EBITDA (or US$18 million on a pro-forma basis) and around US$23 million in 2016. The consideration for the acquisition is 235 million euro to be funded through cash and debt. The acquisition is expected to be around 4% accretive to non-IFRS EPS in 2015 (or around 6% on a pro-forma basis), rising to around 10% in 2016. Multifonds has been growing total revenues at around 10% per annum over recent years.
 
Temenos expects to incur restructuring charges of US$11 million in relation to this acquisition, the acquisition of Akcelerant and other cost rationalization activities across the group.
 
Temenos was advised on the transaction by Barclays, Davis Polk & Wardwell, and PwC.
 

    

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