Warburg Pincus buys 35% stake in Avaloq

Amedeo Goria
22 March 2017

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US private equity firm Warburg Pincus has bought a 35% stake in Avaloq, a Swiss banking software developer, in a deal valuing the business at CHF 1bn.

As part of the transaction, Warburg acquired a 35% stake in the business form the firm's founders, management team and employees, and will appoint two representatives to the company's board.

According to a statement, the deal valued the business at CHF 1bn. The company will use the fresh capital to boost its product development.

Following the transaction, Avaloq founder and CEO Francisco Fernandez will retain a 28% stake, while the management team will own a 27% stake and Swiss lender Raiffeisen Switzerland will retain its undisclosed stake in the business. Furthermore, Fernandez will also become chairperson.

Warburg Pincus aims to retain its stake in the business for seven years and expects an IPO to be a potential exit for the asset.

Prior to the acquisition, the GP purchased a majority stake in London-based investment firm Source from Bank of America Merrill Lynch, Goldman Sachs, JP Morgan, Morgan Stanley and Nomura in January 2014, while more recently it sold, together with General Atlantic, its 25% stake in Santander Asset Management to Banco Santander in November 2016.

Company
Avaloq has developed an integrated banking service software, which targets banks and wealth managers. The company claims 155 clients use its services to manage their clients' assets.

Headquartered in Zurich, the company has a presence in Berlin, Edinburgh, Frankfurt, Hong Kong, Leipzig, London, Lugano, Luxembourg, Madrid, Manila, Nyon, Paris, Singapore and Sydney. It employs a staff of 2,000 and was founded in 1985.

According to a statement, the company generated revenues of CHF 533m in 2016, marking a 10% uptick from the CHF 485m posted in the previous year. Meanwhile, its EBITDA increased by 41% from CHF 58m in 2015 to CHF 82m in 2016, with a 15.4% margin.

People
Warburg Pincus – Daniel Zilberman, Adarsh Sarma (managing directors).
Avaloq – Francisco Fernandez (chair, CEO).