Australia based IRESS Market Technology, a supplier of share market and wealth management systems on Tuesday announced its acquisition of South African firm Peresys Limited and Peresys' technology for an expected 375 million rand, before transaction costs.
Peresys is a technology services provider in the South African financial markets, with an established client base and dominant position in order execution and FIX-based routing across all asset classes.
Peresys said it would immediately establish IRESS' financial markets division in South Africa, building on its existing wealth management presence that together forms significant scale and an extensive product range in South Africa.
IRESS noted existing Peresys revenue of 101.3 million rand, and EBITDA of 39.4 million rand for the year ending March 2010.
IRESS said it would fund this acquisition through its existing cash reserves. It highlighted a purchase price of 340.5 million rand, along with an expected 34.2 million rand performance based earn-out payable over three years, payable in cash.
Acquisition costs are expected to be no more than AUD 0.7m, IRESS said.
The group also pointed to incentive arrangements in place for executive and key staff to encourage transition and retention.
"Where corporate functions are common between the existing wealth management business in South Africa and Peresys, teams will be amalgamated locally," IRESS said.
It said that product synergy would occur over time and immediate growth opportunities exist through opportunities from IRESS product range in South Africa.
Andrew Walsh, MD of IRESS, said: "For some time, IRESS has assessed the opportunity and timing to expand our presence in South Africa from wealth management and introduce our financial market services such as order execution, trading, and market data. The combined IRESS and Peresys service offering is anticipated to grow revenues while leveraging the largely fixed cost base."
"Through this transaction IRESS will expand its client base in South Africa, create immediate and impressive scale with future growth through the combination of Peresys' local strength and IRESS' scale and additional product options," Walsh said.
The MD said the initial focus would be on immediate product opportunities based around introducing IRESS components, specifically; retail online trading, EMS, portfolio management, and market data. "Beyond this, we will review technology opportunities based on demand and opportunity, and ensure ongoing support to clients," Walsh said.
Ashley Mendelowitz, CEO of Peresys, added: "This is an exciting opportunity for Peresys and our customers, who can look forward to having access to an expanded product offering from IRESS. We will continue to do the things that have made us an integral part of the South African financial markets over the past decade, including retaining the same values and our strong focus on domestic requirements, innovations and local support, ultimately ensuring that Peresys remains the material connection point for the international trading community to South Africa and, in time, the rest of Africa."
In South Africa, IRESS divisions of financial markets and wealth management will be led by Ashley Mendelowitz and Philippe Moretonas respectively, both reporting to Walsh.
In respect of Peresys, the management team will continue in existing capacities and gradually take ownership of local delivery as more of the IRESS product set is introduced, IRESS said.
In respect of IRESS Australia, the group said that realising the opportunities available from its increasingly diverse and significant international operations has prompted a necessary but modest increase in costs, including the appointment of a chief operating officer as management capacity is expanded. - I-Net Bridge