Private equity firm Warburg Pincus is to acquire a 35 per cent shareholding in Avaloq group, a fintech company specialising in banking solutions, from existing shareholders.
The transaction values Avaloq in excess of CHF1 billion. Detailed financial terms have not been disclosed.
Under the agreement, Warburg Pincus will partner with Swiss-based Avaloq to accelerate the company’s long-term growth and value creation strategy. Avaloq serves banks and wealth managers worldwide, having largely completed a transformation from a pure software company to an integrated service provider. The transaction allows the firm to rebalance its shareholding structure and bring in an experienced partner in Warburg Pincus to help facilitate the next phase of growth and value creation, with an investment horizon of seven years.
The market for Avaloq’s products and services is expected to grow significantly based upon increasing demand for digital banking, outsourcing, Software as a Service (SaaS) solutions and the overall development of the banking digital ecosystem. Avaloq and Warburg Pincus share the belief that a focus on Avaloq’s customers and developing best in class technology will propel Avaloq to further strengthen its position as leading global services provider to the banking and wealth management industry. This transaction is the first step towards a potential public listing of Avaloq in the coming years.
As part of the transaction, Avaloq founder and chief executive officer Francisco Fernandez will also assume the role of chairman. Jürg Hunziker will serve as deputy CEO and group chief markets officer (CMO).
Concurrent with the transaction, Avaloq is creating a European advisory board to support the company’s strategic initiatives and growth. The European advisory board will include Jacques Aigrain, former chief executive officer of Swiss Re and chairman of LCH.Clearnet; Stefano Boccadoro, the former general manager of Cassa Lombarda Bank and chief executive officer of Santander Italy; Stefan Krause, former chief financial officer of Deutsche Bank and BMW; and Javier Marin, former chief executive officer of Banco Santander.
Fernandez says: “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, a managing director and head of Europe at Warburg Pincus, says: “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.”
