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StatPro acquisition enhances presence in US

StatPro has bought a US cloud-based risk analytics firm Investor Analytics in a move, which significantly enhances the group's US presence and is set to be earnings enhancing in 2016.
StatPro acquisition enhances presence in US
These new models, when combined with StatPro's historical simulation risk model, offer a complete suite of models for any asset manager, said StatPro.

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StatPro (LON:SOG) has bought a US cloud-based risk analytics firm Investor Analytics in a move, which significantly enhances the group's presence in America and is set to be earnings enhancing in 2016.

StatPro will pay US$10mln in cash and a possible further up to US$6 million, payable after one year, dependent on new contract wins.

George O'Connor, analyst at broker Panmure, described the deal as "very neat" and repeated a 'buy' on the shares.

The purchase fills a gap in the group's StatPro Revolution product, adding factor-based risk, variance / covariance and Monte Carlo risk models, it said.

These new models, when combined with StatPro's historical simulation risk model, offer a complete suite of models for any asset manager, StatPro added.

Most of IA's current clients are in the US and should result in around 22% of StatPro's annualised recurring revenues (ARR) coming from the States.

StatPro chief Justin Wheatley told investors: "This earnings enhancing acquisition brings an excellent complementary cloud-based risk service which strengthens and broadens our product and service offering globally.

"IA also brings a highly professional team, new clients and provides greater market penetration into the important US market.

"IA is expected to make a positive contribution to our financial performance in 2016, following a swift integration into our business."

IA is expected to report revenue of US$5 million in 2015 (of which approximately 94% was recurring) and an EBITDA loss of approximately US$0.3 million. IA currently has 53 client contracts with ARR of $4.85 million (£3.3 million).

StatPro is financing the purchase from increasing its debt facilities with Wells Fargo Capital Finance, increased to £24.5 million, of which £17 million is committed.

O'Connor added: "In our view, the new product looks a box perfect functional fit for StatPro as it strengths risk analytics (a key focus area), is similarly cloud-based, and soups up StatPro’s US market penetration."

StatPro is the gift that keeps on giving, he reckons, and with its  transition to social, mobile, analytics and cloud (SMAC) nearing its end the company is one of the cheapest shares in the broker's 'Fintech' universe.

As the restructuring kicker from the latest product initiatives steps in, profit and free-cash-flow should soar and the share price should rise commensurately, he suggests.

Panmure targets 112p for the shares - over 40p more than where they are now at 71.5p - 2.14% up on the day.

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