Agent47 Posted October 5, 2020 Posted October 5, 2020 Japanese IT giant NEC is moving into the digital payments arena after agreeing to acquire Swiss financial concern Avaloq. Formed initially as an IT solutions company, Avaloq has built up a thriving business based around software as a service (SaaS) cloud solutions and business process as a service (BPaaS). NEC will pay 2.05 billion Swiss francs for the company, which equates to around US$2.33 billion. With plans to boost its business in the digital government field, the move will allow NEC to develop its digital finance software and domain knowledge. However, Avaloq will to continue to operate as a standalone company. With NEC’s existing expertise in biometric and AI technologies the acquisition will see the Japanese tech company move its business towards innovative SaaS business models. Take a look at the best credit card processing services Check out the best money transfer apps and services The best tax software around today Since launching in 1985 Avaloq has grown its customer base significantly and now numbers 150 clients across 30 countries around the globe. The Zurich-based company is well known for its work with Fintech startups and specialisms in AI, blockchain and other emerging areas of financial tech. SaaS products "NEC will be placing great importance on building long-term relationships with Avaloq and its customers, and aims to create new solutions that combine Avaloq's software with NEC's cutting-edge technologies, such as its brand of biometric authentication solutions, "Bio-Idiom," the company's AI technology brand, "NEC the WISE," and its innovative blockchain technologies," said Takashi Niino, President and CEO, NEC Corporation. With the financial industry moving away from conventional practices and heading towards a more open banking-based setup NEC hopes that its purchase of Avaloq will give it the capacity to grow its digital finance capability by developing a more expansive range of SAAS products. "The Avaloq team is delighted to be joining the NEC Group, a highly trusted and well-respected company with a long heritage, which will help further enlarge our geographical footprint across the globe," said Juerg Hunziker, CEO of Avaloq on the acquisition, which should complete by April next year. Japan’s NEC Corp said on Monday it will buy Swiss financial software company Avaloq Group AG for 2.05 billion Swiss francs ($2.2 billion), a move that will spearhead its entry globally into finance software. NEC will acquire unlisted Avaloq, Europe’s top provider of financial asset management software, from Avaloq’s founder and employees and private equity firm Warburg Pincus, which has a 45% stake and engineered the sale. Avaloq, whose customers include Deutsche Bank and HSBC, reported sales of 610 million Swiss francs ($664 million) last year, 70% of which came from Europe. The deal will allow NEC to offer cloud services acquired through the merger combined with its own biometrics and data analysis products to financial institutions and governments as digitalization gathers pace. It has spent the last decade restructuring unprofitable units that lost business to price-competitive Asian rivals, selling its semiconductor, personal computer and smartphone units. NEC said it will target Japan, where financial institutions have been slow to move online and new Prime Minister Yoshihide Suga has pledged to modernize outdated government systems. “Japan is lagging in financial digitalization and this will be a big trend,” Chief Executive Takashi Niino told a news briefing. The deal follows NEC’s 2018 acquisition of British IT services company Northgate Public Services, whose customers include London’s Metropolitan Police, and 2019 purchase of Danish e-government services firm KMD for more than $1 billion. NEC “share my ambition for Avaloq to continue to shape the future of the financial industry by continuing to invest heavily in R&D,” Avaloq founder Francisco Fernandez said in a statement. Warburg Pincus had been targeting a 2020 sale or listing of Avaloq, Reuters reported last year. NEC recently received a 64.5 billion yen ($560 million) investment from Japanese telecoms company Nippon Telegraph and Telephone (NTT) to beef up its efforts to develop fifth-generation (5G) wireless technologies. NEC held around 400 billion yen ($3.8 billion) in cash and cash equivalents at the end of June. The deal is expected to be completed by April 2021 after necessary approvals.
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