Avaloq, a Swiss-based specialist in digital banking solutions, core banking software and wealth management technology, has been acquired from its existing shareholders, including private equity investor Wearburg Pincus, by Japanese NEC Corporation. Founded in 1985, Avaloq provides powerful cloud solutions for banks and wealth managers around the globe through business process as a service (BPaaS) and software as a service (SaaS). With more than 120 years of expertise, NEC is a leader in the integration of IT and network technologies that benefit businesses and people around the world. Listed on the Tokyo stock exchange, NEC is a truly global organisation with office locations in more than 50 countries. NEC today announced the acquisition of 100 per cent of Avaloq’s shares, 45 per cent of which are owned by Warburg Pincus, while the rest are held by Avaloq’s founder and employees. The acquisition is expected to be worth CHF2.05 billion, and expects to complete by April 2021, following the confirmation of necessary procedures and approvals for each organization.
Avaloq will continue to operate as its own entity, headquartered in Switzerland. Clients will continue to enjoy the high level of service they’ve grown used to. This transaction will not lead to a reduction in workforce, and the management remains fully committed to Avaloq’s growth story.
NEC is committed to realising a society that embodies the values of safety, security, fairness and efficiency through digital inclusion. The company is focusing its efforts on solutions that leverage information and communication technologies (ICT) to create advanced social infrastructure. These solutions are known as NEC’s Solutions for Society.
Robust financial institutions build a crucial part in NEC’s vision for smart cities. Banks and financial institutions worldwide are embracing rapid digitalisation as a way of offering secure and seamless financial services and addressing a rapidly growing customer appetite and global market for digital- first banking. With its 30-year heritage and focus on innovation in digital banking solutions, core banking software and wealth management technology, Avaloq is uniquely qualified to complement NEC.
Avaloq and NEC will be placing great emphasis on building a long-term and strong relationship. Through the acquisition of Avaloq, NEC acquires domain knowledge in the digital finance field and enters this segment globally.
NEC has very well-established research centres, amongst others also in Heidelberg, Germany, which Avaloq would start to collaborate with in order to anticipate future trends as early as possible and build smarter solutions for clients. Digitalisation and big data are rapidly transforming the world, making it possible to offer each individual services and solutions tailored to their specific needs. Key to the seamless integration of this technology in society — so that people can enjoy its benefits without worrying about security or access — is the use of biometrics, an authentication technology that identifies individuals based on physical and behavioural characteristics peculiar to that individual. NEC is a clear leader in this and other fields such as artificial technology with “NEC the WISE”, and its innovative blockchain technologies. NEC holds great ambitions for Avaloq in this space, which will greatly benefit from NEC’s very strong research-oriented approach and the vast resources it pours into research & development.
Democratisation of wealth management fosters digital inclusion
Avaloq is a leader in digital banking solutions for high end wealth management services and private banks globally. While this area remains a clear focus for Avaloq, going forward we strive to include also the affluent segment. Digital inclusion is going to be one of the most important topics in the future. Customised wealth management advice remains almost exclusive to high net worth individuals to date. Through digitisation, we will be able to democratise wealth management and make asset classes and advice-led banking services, which are largely reserved for the wealthy only, available to mass affluent investors as well. This opens up a highly attractive segment of new clients for private banks and wealth managers globally.
Jürg Hunziker, CEO of Avaloq, says: “The Avaloq team is delighted to be joining NEC Group, a highly trusted and well-respected company with a long heritage, which will help further enlarge our geographical footprint across the globe. Due to very similar values of professionalism, reliability, quality and excellent service for clients with a focus on precision, we firmly believe that this partnership will be a successful one for employees, clients as well as other stakeholders. The whole Group Executive Board at Avaloq is committed to driving forward our growth strategy and we are very glad to have a strong partner on our side who supports our long-term vision. With NEC, Avaloq found a perfect new home to continue our success story of serving our clients with solutions that make their lives simpler in an ever more complex world. The Avaloq team would like to thank Warburg Pincus for its valuable strategic advice and continued support during our successful partnership.”
Francisco Fernandez, founder and chairman of Avaloq, says: “With this step I leave Avaloq in the best hands possible. My goal was to find a partner and owner, who can make Avaloq grow and prosper further, for many years to come. Talking to NEC’s top managers it became clear to me, that they share my ambition for Avaloq to continue to shape the future of the financial industry by continuing to invest heavily in R&D. But I also sensed the cultural fit, caring about customers and people, striving for excellence and highest quality standards, for which ultimately Switzerland and Japan stand for. I am proud to add a humble contribution to the legacy of a great visionary engineer: Kunihiko Iwadare, whos spirit is still perceptible at NEC today. I remain available, deeply grateful and in sincere friendship to everybody that accompanied me during this 30-years journey.”
Takashi Niino, President and CEO of NEC Corporation, says: “NEC strongly believes in the importance of safety and security around financial institutions, which is absolutely crucial for sustainable prosperity and digital inclusion. Avaloq is a recognized global leader in their field, and their compelling offering is expected to complement our current solutions. NEC aims to further expand its business in the digital government and digital finance areas, by globally developing SaaS and BPaaS business models that utilize software and technologies from throughout the NEC Group, including Avaloq’s.”
Adarsh Sarma, Partner and Co-Head of Warburg Pincus Europe, says: “We have enjoyed a rewarding and successful partnership with Avaloq’s Chairman and founder, Francisco Fernandez and Juerg Hunziker, Group CEO. Avaloq has grown quickly to establish itself as a global leader in banking software and is one of the most strategic fintech companies in its space. Together with management, we have transitioned Avaloq from an on-premise business model into software-as-a-service provider, launched new innovative cloud native digital products and expanded into multiple new geographies. With strong leadership and governance in place, we are confident that Avaloq will have great future success under new ownership and wish them the very best.”
