Avaloq, the Swiss-based fintech group of integrated and comprehensive banking solutions, announced today that private equity firm Warburg Pincus will be acquiring approximately 35 percent of the company from existing shareholders, valuing Avaloq in excess of CHF 1 billion.
Avaloq’s Francisco Fernandez will keep 28% shareholding, management and employees will retain an additional 27%, while the shareholding position of Raiffeisen Switzerland bank will remain unchanged at 10%. The transaction is expected to take place in the second quarter of 2017, by which time Warburg Pincus will have nominated two executives to Avaloq’s Board of Directors.
Warburg Pincus has USD 10 billion invested in over 90 fintech and financial services companies, including: 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.
Partnership with Warburg Pincus is expected to accelerate the company’s long-term growth and value creation strategy, with an investment horizon of 7 years. The transaction will also allow the company to rebalance its shareholding structure.
Avaloq has recently moved from being a pure software company to becoming an integrated services provider. Thus taking advantage of the increasing demand for digital banking, outsourcing, and Software as a Service (SaaS) solutions. The new partners see the transaction as the first step towards a potential public listing of Avaloq in the coming years.
In parallel with the transaction, Avaloq will set up a European Advisory Board for strategic initiatives and growth, members will include Chairman Jacques Aigrain, former CEO of Swiss Re and Chairman of LCH.Clearnet; Stefano Boccadoro, Chief Executive Officer of Santander Italy; Stefan Krause, former CEO of Deutsche Bank and BMW; and Javier Marin, former CEO of Banco Santander.
Commenting on the transaction, Avaloq’s CEO Francisco Fernandez said: “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. While Avaloq’s management, employees and current Board of Directors retain the majority by means of shares and governance, we will leverage Warburg Pincus’ expertise to continue our path for capital market readiness.”
Daniel Zilberman, Head of Europe at Warburg Pincus said: “With its focus on innovation, we believe that Avaloq is uniquely qualified to take advantage of growing demand for cutting-edge software and outsourced services in the financial industry. We look forward to partnering with Francisco, Jürg and the rest of Avaloq’s talented team as the company enters a new and exciting stage in its international growth path.