M and A
NEC Completes Avaloq Purchase

The M&A deal, announced two months ago, is a sign of the kind of multinational forces at work shaping the technology used by private banks, wealth managers and other financial firms.
Japan’s NEC has closed its
acquisition of Switzerland-based Avaloq having first announced
the transaction in October. It is one of the larger such deals in
the sector of technology firms serving wealth management and
banking of recent years.
The transaction put an enterprise value on Avaloq of SFr2.05
billion ($2.23 billion). Further financial terms were not
disclosed at the time. (The enterprise value represents a
multiple of 21.4 x 2020 adjusted earnings before interest,
taxation, depreciation and amortisation. Last year's revenue was
SFr609 million.)
NEC now holds all of Avaloq’s shares, including the 45 per cent
previously held by private equity firm Warburg Pincus, as
well as the remaining shares held by Avaloq’s founder Francisco
Fernandez and by employees.
Founded in 1985, Avaloq provides cloud solutions for banks and
wealth managers through business process as a service (BPaaS) and
software as a service (SaaS) along with on-premise
solutions.
As part of the acquisition, Tokyo-based NEC has installed a new
board of directors with NEC’s executive vice president, Masakazu
Yamashina, as the new chairman of Avaloq. Along with a new
chairman, there will be four new members joining the board:
Tomoki Kubo, Tomonori Hira, Daichi Iwata and Asako Aoyama.
Francisco Fernandez and Peter Schöpfer will remain members of the
board of directors of Avaloq Group, the firms said in a statement
yesterday.
Avaloq will continue to operate as its own entity, based in
Switzerland.
“This transaction will not lead to a divestment in any of our key
regions or offerings, and the management is fully committed to
Avaloq’s growth story,” Avaloq said in its statement.
Yamashina, Avaloq's new chairman, said: “With its 35-year
heritage and focus on innovation in digital banking solutions,
core banking software and wealth management technology, Avaloq is
uniquely qualified to launch NEC into the Digital Finance field,
which together with Digital Government, is one of the pillars for
building NEC’s global growth.”
The Avaloq transaction may have surprised some in the choice of
suitor, but there had been speculation for months about the Swiss
firm’s future. In November last year a media report said that
Warburg Pincus was planning a sale in 2020 or an initial public
offering.