IRESS Acquires Spotlight (SA)
Australian Based IRESS Expands Wealth Management Solutions in South Africa Leading South African Wealth Management Suite
Spotlight Management and Staff Retained
Management Breadth Now in South Africa
IRESS announced today the acquisition of South African financial planning software provider Spotlight Interactive for an expected $8.4 million AUD. Spotlight is a long-standing South African software business with approximately 16,000 contracted end-users representing all major institutions and independents.
This investment builds on the very strong performance of the IRESS wealth management division since 2003 and reflects IRESS resolve and commitment to the wealth management services space.
"Following the acquisition of PlanTech in September 2006 it has been our goal to materially grow our position in South Africa both organically and by assessing strategic options. Spotlight is the clear standing industry leader, and through this transaction we create impressive scale plus exciting growth potential from the combination of Xplans technology and Spotlight's local strengths", said Peter Dunai, Managing Director of IRESS.
Andrew Walsh of IRESS Wealth Management Solutions said, "We believe strongly in local expertise that leverages from our global experience and technology offerings. Spotlight will continue to operate as a South African focused domestic business, with client support and development provided locally, drawing upon the expanded technology products where beneficial. Consistent with this, we will seek to move the development of South African-specific components from Australia to South Africa over time. There are also numerous opportunities to exploit time zone differences to gain software delivery efficiencies, such as server maintenance, and development turnaround for the benefit of clients in all regions."
Philippe Moretonas, Managing Director of Spotlight commented, "Our existing Spotlight software solution is desktop-based but with a developing web-based strategy. A number of clients have already expressed keen interest for a web solution in South Africa, which reflects a growing trend for web solutions in delivering ease of central database management, flexibility and integration, compliance, and lower cost of ownership."
"This acquisition is a significant opportunity for Spotlight, and South Africa, to leverage available IRESS software solutions to fast-track delivery of a web based solution to our market, while not losing focus on support and development of our existing products to which we are committed" said Moretonas.
"Further to the impressive position Spotlight has in South Africa, this acquisition provides Spotlight with IRESS backing to invest in both client-driven and industry solutions for the future, which includes many insurance and investment STP opportunities", adds Walsh.
About Spotlight
* Leading South African vendor with large installed user base.
* Revenue over $4 million AUD, 90%+ recurring license fees.
* Well established strong client relationships.
* Client base predominantly risk specialists and general practice advisers, with emerging investment planners.
* Business presence in all major locations.
* Desktop solutions with web strategy.
About IRESS Wealth Management Solutions
* Leading provider of financial planning software in Australia and New Zealand.
* Brands include Xplan, VisiPlan, ProPlanner, Risk Researcher.
* Rapid growth since acquisition of XPLAN by IRESS in 2003.
* Annualised revenue of over $30 million AUD.
Financials
* Purchase price of $6.4 million AUD, plus performance based earn-out payable over two years, expected to amount to a further $2 million AUD.
* No day one synergies as Spotlight will continue business as usual with development and support for current desktop solution. Growth opportunities exist through sales and growing product range in South Africa.
* Earnings accretive in the first year, further enhanced in second year from significant new client (already contracted).
* EBITDA comfortably over $1 million AUD growing towards $2 million AUD at end of second year.
Highlights
* IRESS now responsible for industry leading wealth management solutions in Australia, New Zealand, and South Africa.
* Spotlight to continue and operate as self-sufficient entity, with local support and development, leveraging from IRESS group.
* Strong potential to broaden modular software take-up in South Africa.
* Potential to implement investment expertise in South Africa.
