On 4 March, Temenos announced its largest ever acquisition, the purchase of Luxembourg-based Multifonds, a market leader in investment fund software for the alternative and traditional fund industry. Here, Max Chuard, Group CFO, gives a brief overview of the deal.
Multifonds, which has around 470 employees based out of 14 global locations, has a similar profile to Temenos. It is a specialist software provider with a strong domain expertise and long standing strategic client relationships. In Multifonds' case, its focus is fund administration providing fund accounting, portfolio accounting and transfer agency software to the fund management industry; the entire business is focused on the development, delivery and implementation of this software. More than $5 trillion in assets for traditional and alternative funds are processed on Multifonds software across more than 30 jurisdictions for leading asset managers, third-party administrators and insurance companies, including 9 of the top 15 global tier one administrators. Multifonds software is absolutely mission-critical to the businesses that use it, which means that it is engineered to most exacting standards with a high degree of flexibility and configurability to meet clients' needs.
Like Temenos, Multifonds' software is proven to have a dramatic impact on its customers' profitability, boosting profitability on average by around 40%. The Multifonds' business model and approach is focused on helping clients succeed in meeting their changing and new business needs, catering for the regulatory change agenda cost effectively, enhancing their ability to grow their business and improving operational controls and efficiency.
The Multifonds software offers a single platform for these three fundamental areas of fund administration; portfolio accounting, fund accounting and transfer agency. There are approximately 40 client installations; typically the large tier one clients have one physical installation to support global operations across more than 30 regulatory jurisdictions. Multifonds' proven cross jurisdictional, cross asset class and regulatory coverage on a single, scalable platform is what sets Multifonds apart from its competitors.
Multifonds Global Accounting combines the Investment Book of Records (IBOR) and Accounting Book of Records (ABOR) for fund and portfolio accounting supporting the complex needs of the middle office including start-of-day and on-demand valuations for the IBOR and daily, weekly and monthly Net Asset Value (NAV) calculations for the ABOR. It is deployed by institutions around the world handling assets totalling over $3.7 trillion and clients include: RBC, HSBC, BNP Paribas, Citi, Standard Chartered, Great West Life, Robeco, Union and Credit Suisse.
Multifonds Global Investor consolidates investor servicing and transfer agency operations onto a single, industrial-scale platform across all investment fund types. It supports global assets totalling over $1.8trillion across more than 20 fund domiciles. It handles both traditional and alternative funds with STP rates in excess of 75%, with investors resident in more than 160 countries across the globe. Transfer agency clients include: Brown Brothers Harriman, BNP Paribas, EFA, Northern Trust, JP Morgan and Pictet.
The deal rationale
The acquisition of Multifonds is highly strategic and will benefit Temenos and its stakeholders in a number of important ways.
It adds considerable extra scale to our business. The acquisition is expected to boost Temenos group sales by around 10%, giving us additional scale to invest in the combined business, sales and marketing and R&D and a stronger platform for growth. It also raises the company profile and stature; Temenos now serves 38 of the top 50 financial institutions, we process the accounts of 500 million individuals and support more than $5 trillion in assets
We gain access to another fast-growing market. In common with the rest of the financial services market, the fund administration market is undergoing significant change. Margins are under pressure and providers need software that enables them to cut costs sustainably and extract economies of scale in a consolidating market. As a result, the market is growing by around 10% per annum and we recognize that this presents a huge opportunity. The acquisition gives us presence in that market, grows the Temenos customer base and opens up or expands our relationship with a number of blue-chip and client relationships with more than 30 of the world's largest financial institutions, including JP Morgan, Citi, HSBC, Credit Suisse and Northern Trust.
The addition of Multifonds adds a highly complementary product line and enables us to offer a broader and more compelling portfolio of market-leading products to new and existing customers. As a result, Temenos now has market-leading products spanning private and wealth management, retail banking, transaction banking, risk and compliance and fund administration. For financial institutions this means we are even better positioned, at a time of great change in the industry, to fully address their diverse needs across the investment management value chain.
For those of you joining us at this year's TCF, you will have the opportunity to meet the Multifonds team, learn more about their business, meet some of their customers and see demos of their products.