A private equity buyer is buying more than one-third of Avaloq, finews.asia has learned. The deal values the banking software firm at 1 billion Swiss francs.
The Zurich-based firm's fate has been the subject of private equity talk for months, and Avaloq itself hinted last month that it would open itself to outside investors soon.
Now, Warburg Pincus, a New York-based private equity firm, is set to buy a 35 percent stake in Zurich-based Avaloq, two sources familiar with the matter told finews.asia – making it the heftiest investor outside of management and employees.
A deal is expected to be announced later on Wednesday.
1 Billion Sfr Valuation
Warburg Pincus is buying shares currently held by management, board members and employees, the people said. The firm itself is not selling shares, nor is Raiffeisen, a Swiss cooperative lender which holds a 10 percent stake in Avaloq.
The process valued Avaloq at roughly 1 billion Swiss francs – the dimension that majority shareholder and Chief Executive Francisco Fernandez has in the past cited as his goal before going public.
Avaloq, which continues to pursue an initial public offering as a mid-term goal according to the people, hopes to tap Warburg Pincus' extensive network in the U.S. and Asia and in particular China, which the firm has defined as its largest growth markets.
Hunziker Steps Up
Avaloq will make several management changes as a result of the private equity ownership: CEO Fernandez will become chairman, in addition to his CEO role.
As a result, deputy CEO Juerg Hunziker, who joined from SunGard last year, is expected to take on a fuller role in managing the company.
With more than $44 billion in assets under management, Warburg Pincus is a giant in private equity. The firm knows finance and technology well from past investments: three years ago, it bought a majority stake in exchange-traded products firm Source, and four years ago a stake in Santander Asset Management.
Strategy Consistent
The private equity firm will send two board representatives to Avaloq, which isn't expected to alter its strategy as a result of its new shareholders.
Following the transaction, Avaloq's management and employees will still hold the bulk – 55 percent – of shares. Of that, Fernandez himself owns just over half, or 28 percent of the overall firm.