Misys, the UK-based sell-side technology specialist, is set to acquire Paris-based buy-and sell-side risk management provider Sophis for €435 million - €273 million of which is the equity sale, while the remainder (€162 million) is made up of Sophis' current debt.
There is little doubt that this acquisition will elevate Misys' status as one of the leading players in the financial technology space, especially given the market penetration and depth of functionality offered by Sophis' existing technology stable: Risque, a sell-side risk management platform; VALUE, a buy-side portfolio management and risk platform; and iSophis, the vendor's most recent addition to its line-up, a cross-asset portfolio and risk management application delivered as an ASP.
Victor Anderson's Assessment
"Acquisitions like this take place in our industry all the time. You don't have to look further than SunGard to see literally hundreds of examples of this type of activity, although these things rarely turn out as swimmingly as both parties anticipate at the outset.
I have no doubt that the Sophis products and services will benefit through economies of scale and the significantly larger operating capital offered on the back of the Misys hook-up - not to mention the luxury of shedding the debt millstone that must have been tough to service.
But I do have my reservations from Sophis' perspective, reservations that surely its substantial client roster must be feeling too: I'm concerned that all the special things that made Sophis such a brilliant buy-side technology vendor - not least of which is its entrepreneurial drive and its ability to provide users with the latest functionality - might be diluted or lost altogether now that it is part of a far larger organization. Perhaps the two firms will operate at arm's length and Sophis will retain much of its autonomy, but somehow I doubt that.
Anyway, I hope I'm wrong with my gut feeling, but great technology companies like Sophis rarely, if ever, get better as a result of such an acquisition."
James and Anthony talk about the looming Sibos event in Toronto and take a look at some recent M&A activity and blockchain developments in the capital markets.Subscribe to Weekly Wrap emails