Avaloq in talks with private equity firms?
Avaloq is rumoured to be talking to private equity (PE) firms, according to a Swiss online news outlet, finews.com. Suitors reportedly include New York-based KKR.
Avaloq is one of the very few large banking technology companies remaining in the hands of its founders. Talks about Avaloq’s possible sale have surfaced a number of times over the last decade, but the company continues to be privately owned today.
“We do not comment on any rumours,” Avaloq’s spokesperson tells Banking Technology. “We continue to consequently execute our clearly defined growth strategy.”
The spokesperson adds that 2016 is expected to be “another record year” for the private banking software vendor. Avaloq reported a “record” financial year in 2015 with a turnover of almost CHF 500 million ($518 million).
Avaloq has been growing its market share steadily, sparking concerns that the company’s resources are being stretched.
The vendor has dipped its toe in the retail banking waters recently, with a project at a European subsidiary of Turkey’s Isbank.
It is also pondering setting up a business process outsourcing (BPO) centre in the UK – something it has been planning to do for a number of years. The initial plans involved a joint venture with Lloyds Banking Group, but that did not materialise. Banking Technology understands that Avaloq is now in talks with another potential partner, and that a UK BPO idea might come to fruition in 2017.
Avaloq has a small but impressive list of customers in the UK, including Barclays Wealth, Coutts, Rothschild Private Banking & Trust, and Canaccord Genuity Wealth Management (CGWM).
Avaloq also had similar BPO plans for the Benelux region, but these were scrapped. Banque Internationale à Luxembourg (BIL) was going to be Avaloq’s partner for a BPO joint venture, but the two parties could not agree on the commercial terms. BIL was also going to replace its legacy software with the Avaloq Banking Suite, but this did not go ahead either. Earlier this year, Avaloq’s rival Temenos got the BIL core software contract.
Another setback for Avaloq came from Germany, where BHF-Bank has recently put its core banking system revamp on hold. BHF-Bank, now owned by Oddo & Cie, decided to halt the project due to “differences in the interpretation of the contract”. The contract date (2014) predates the arrival of Oddo & Cie.
Meanwhile, BHF-Bank’s sister bank in the UK, Kleinwort Benson – which Avaloq also hoped would implement its core banking platform – was sold by Oddo & Cie to Société Générale earlier this year. The bank, now known as Kleinwort Hambros, has decided to build a new BPO centre with another tech vendor, FNZ.
Earlier this year, Avaloq also lost a long-standing customer – BSI – in its home market in Switzerland to Temenos.
BSI was taken over by another Swiss bank, EFG International, and with that came the core banking system replacement. BSI had been using Avaloq Banking Suite on the BPO basis, supplied by Avaloq Sourcing Switzerland (formerly B-Source).
Actually, BSI and Avaloq used to be co-owners of B-Source. Avaloq bought out BSI’s share in B-Source in early 2016.
