Iress sells off managed funds business
Iress has entered an agreement with SS&C Technologies to sell its managed funds administration (MFA) business for $52 million, with the deal expected to close in the third quarter of FY2023.
The transaction follows the announcement of Iress’ refreshed strategy in April and the firm is expected to use the proceeds to retire debt.
It had acquired the MFA business, one of the country’s largest third-party fund registries with around $900 billion in managed assets across over 1,400 funds, four custodians and 69 fund managers, as part of the OneVue purchase in November 2020.
Iress Group chief executive, Marcus Price, considered SS&C a “natural home” for the MFA business.
“This transaction is an important step in executing against Iress’ refreshed strategy. As outlined to the market in April, we are committed to reducing costs, driving growth in our core Australian businesses, and managing our portfolio of non-strategic assets for value and the releases of capital,” Price stated.
“SS&C is a natural home for the MFA business. They share our strong belief in supporting the financial services community through technology-powered solutions. We are confident SS&C is well placed to invest in the growth of the business for the benefit of both its clients and people.”
Completion of the sale is subject to granting access to the systems and transferring the employees necessary to operate the MFA business. Around 150 team members will join SS&C’s global investor and distribution solutions. No financing or regulatory approvals are required to complete the transaction.
Following completion, Iress will continue to provide transitional services to the MFA business for a period of 24 months, to assist in the transition to SS&C’s ownership.
The MFA team will augment SS&C’s capabilities with a full range of outsourced unit registry capabilities for Australian fund managers and custodians, the global firm said.
"Today's announcement enables SS&C to further develop its fund servicing footprint in Australia and elevate our global transfer agency capabilities. We are deeply committed to this region and look forward to expanding Australian asset managers’ access to best-in-class digital servicing, data solutions and servicing support across the investment management lifecycle,” said Bill Stone, SS&C chairman and CEO.
In its half year results to 30 June 2023, Iress reported revenue of $315.3 million and underlying EBITDA of $59.5 million. Underlying net profit after tax (NPAT) was $24.4 million.
Price said: “Our half-year results represent Iress mid-transformation, with many of the benefits, including the cost reduction program and a review of pricing to be recognised in the full year results for 2023 and in FY24.
“Despite this, revenue increased in a challenging macro environment while EBITDA was impacted by cost pressures, including a significant uplift in tech infrastructure, market data and inflationary salary costs.”
He added that the board felt it was prudent to suspend its interim dividend.
Price said: “We will conduct a thorough reassessment of our capital management framework, including a new dividend policy, while we continue to realise assets, reset our cost base and emerge as a leaner Iress.”
Earlier this year, it had announced a 10 per cent headcount reduction towards reducing cost amid changes to its senior leadership team, which included Harry Mitchell as CEO of wealth management, Jason Hoang as CEO of trading and market data, Paul Giles as CEO of superannuation, and John Harris as CEO of managed portfolio, effective 1 July.
AUTHOR
Rhea Nath
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