Lombard Risk Management has acquired the regulatory reporting business of SOFGEN, an international provider of IT solutions for banks, for a total consideration of $4,2 million payable in a combination of cash, loan notes and equity.
The business acquired has proforma profits in the region of $0.4 million to $0.5 million per annum and the Board of directors of the company anticipates appreciable revenue synergies over and above the sum of the two businesses at present, said a statement from Lombard Risk. The equity component of the transaction will see SOFGEN subscribing for 2,327,556 new shares in Lombard Risk at 11.75 pence, the price prevailing on the date on which a letter of intent was signed. Application has been made for the admission of these new shares to AIM, the London Stock Exchanges international market for smaller growing companies, and dealings are expected to commence on Dec. 22 2011. Following the transaction the number of Lombard Risk shares in issue will increase from 206,926,786 to 209,254,342.
The main part of the business acquired, which in the past was known in the U.S. as IDOM USA, is the United States and Canada regulatory reporting product REG-Reporter, which has a North America-centric client base including top banks such as Bank of America and Royal Bank of Canada.
The transaction will strengthen Lombard Risks position as a leading provider of regulatory reporting to foreign banks in the US and the third largest provider (as measured by assets reported on, not number of institutions) of regulatory reporting to domestic banks in the US after FIS and Jack Henry. The companys REPORTER regulatory reporting product is used globally including in the United States. The combined business now has over 250 clients for regulatory reporting around the world, including 130 UK clients. Additionally, Lombard Risk also has regulatory reporting solutions in place in Asia Pacific markets such as Singapore, Hong Kong, Japan, Indonesia and Thailand. Clients include an international financial services institution, which bought REPORTER to meet its regulatory obligations in China.
Commenting on the acquisition, John Wisbey CEO of Lombard Risk said: This is an important strategic breakthrough for us, as it gives critical mass in the North American market place, both for foreign and domestic banks in the United States. We already had this for collateral management but we now have it for regulatory reporting. The REG-Reporter business and its management are well respected in the market, and it has built an impressive and very loyal client base. As the market moves away from having multiple suppliers in different countries, this acquisition will allow us to serve our global clients better with much more ability to conclude deals in multiple countries and continents. We understand this business and its business model extremely well, so we are absolutely sticking to the knitting with this acquisition.
Vincent Raniere, who, following the acquisition, will be managing director and head of Regulatory Americas for Lombard Risk, commented: My team and I are very pleased for REG-Reporter to have the backing of a global software company which understands regulatory reporting so well.
Our technology team will have access to a much deeper technology organization which is already very experienced in regulatory requirements, web technology, XBRL, workflow and the requirements for fast and scalable performance, while at the same time we will have the ability to extend our international reach greatly and to offer more international regulatory services to our U.S. clients.
(JDC)