Warburg Pincus sells stake in Avaloq at CHF 2bn valuation

Avaloq's management team and US-based sponsor Motive Partners have also sold their stakes in the business.

There were five bidders at the final stage of the process, three of which submitted bids of more than CHF 2bn. The CHF 2.05bn valuation represents a multiple of 21.4x adjusted 2020 EBITDA.

The deal is expected to be completed by April 2021.

Unquote sister publication Mergermarket reported in July 2020 that the sale process for Avaloq had begun. The report cited sources who said large-cap sponsors including Permira, EQT, TPG, Advent International, Bain Capital, Astorg, Cinven, KKR and CVC were interested in the process. On the strategic side, Temenos, FIS, Fiserv and Ion Group were named as potential buyers (Acuris, the publisher of Unquote, is owned by Ion Group).

Previous funding
Warburg Pincus acquired a 35% stake in Avaloq from founder Francisco Fernandez, management and employees in March 2017, investing alongside Motive Partners in a deal valuing the company at CHF 1bn. Fernandez retained a 28% stake, while the management team retained a 27% stake. Motive Partners invested via its debut fund, which held a final close in November 2019 on $473m.

Warburg Pincus increased its stake to 45% in November 2017, acquiring an additional 10% stake from Raffeisen Bank.

Company
Founded in 1985 and based in Zurich, Avaloq provides banking process software for use by banks and financial services providers. The software is split into the platforms Engage, Wealth and Insight, covering areas including the management of compliance, cloud and open banking processes, as well as crypto assets and blockchain management. The company has 150 clients in 30 countries, according to its website, including Barclays, Deutsche Bank and HSBC.

Avaloq has 2,000 employees, and has operations in Hong Kong, Singapore, Manila and Sydney, as well as in Europe. It reported revenues of CHF 609m in 2019 and EBITDA of CHF 97m, representing an EBITDA increase of 7% compared with the previous year. The company generated revenues of CHF 533m and EBITDA of CHF 82m in 2016.

People
Warburg Pincus – Adarsh Sarma (partner, co-head of Warburg Pincus Europe).
Avaloq – Jürg Hunziker (CEO); Francisco Fernandez (founder, chairman).
NEC Corporation – Takashi Niino (president, CEO).

Advisers
Vendor – Goldman Sachs (corporate finance); EY (financial due diligence, tax); Kirkand & Ellis (legal); Homburger (legal); Boston Consulting Group (commercial due diligence).

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