Japanese tech giant NEC Corporation has acquired 100 percent of Avaloq’s shares, making it Switzerland’s new largest provider of financial software.
NEC announced that it will acquire 45 percent from Warburg Pincus and the remaining from Avaloq’s employees and founder Francisco Fernandez, for 2.05 billion Swiss francs ($2.24 billion), according to a statement. Pending necessary approvals, the acquisition is planned for completion by April 2021.
«With this step I give 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,» said Avaloq founder and chairman Fernandez. «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.»
Avaloq will continue to operate as a separate Switzerland-headquartered entity with no expect cuts to the workforce and continued commitment to growth.
Immediate Research Focus
According to NEC, it can kick off collaboration via research centers closer to Avaloq, including one in Germany’s Heidelberg. The initial focus will include anticipation of future trends, especially in the use of biometrics.
Other fields where NEC has placed emphasis on include artificial technology and 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 and development,» the statement said.
New Avaloq: Beyond Wealth Management
Post-acquisition, NEC said it will also look to further the democratization of financial services via Avaloq by extending its focus beyond just high-end wealth management services and private banks to include the affluent segment.
«Digital inclusion is going to be one of the most important topics in the future. Customized wealth management advice remains almost exclusive to high net worth individuals to date,» the two companies said.
«Through digitization, Avaloq will be able to democratize 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.»
Soft Factors
Beyond its existing business and operational capabilities, NEC and Avaloq also underlined some of the soft factors that it views favorable for the acquisition, including the shared values between the Swiss and the Japanese.
«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,» Fernandez said, complimenting the legacy of NEC’s founder. «I am proud to add a humble contribution to the legacy of a great visionary engineer: Kunihiko Iwadare who’s spirit is still perceptible at NEC today.»
«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,» added Avaloq CEO Juerg Hunziker, who called NEC the «perfect new home» for the financial software provider.
Digital Government and Finance
According to NEC president and CEO Takashi Niino, the Japanese tech firm will look to globally develop its business process as a service (BPaaS) and software as a service (SaaS) models to expand its business in areas related to digital government and digital finance.
«NEC strongly believes in the importance of safety and security around financial institutions, which is absolutely crucial for
sustainable prosperity and digital inclusion,» Niino added.
Tokyo-based NEC was founded over 120 years ago in 1899 as an electronics manufacturer including telephones and switches. Today, its focus has expanded to include the integration of IT and network technologies with offices in more than 50 countries.
