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StatPro ups its stake in South African-based software provider

Last updated: 12:45 23 Feb 2017 GMT, First published: 07:27 23 Feb 2017 GMT

silver bull and silver bear on a share certificate
StatPro took a majority interest in Infovest this time last year

StatPro Group PLC (LON:SOG) has increased its stake in the South African-headquartered software provider, Infovest Consulting Ltd.

Wimbledon-based StatPro took a 51% stake in the business last March and it has now increased this holding to 72.7%.

It paid £1.2mln in cash for the additional 21.7%, funded by its financing facility with Wells Fargo Capital Finance.

The increase in shareholding is expected to be earnings enhancing in the current year, StatPro said, adding that it expects to benefit from Infovest’s growing revenues and profits.

“Since we took a majority share on 1 March 2016, Infovest has experienced a 77% revenue growth and 130% profit growth,” said StatPro chief executive Justin Wheatley.

“As Infovest has been able to leverage our extensive network to offer valuable enhanced services to our clients, we expect to see further growth in revenue and profit from this business.”

Infovest specialises in data warehouse, extract, transform and load (ETL) and reporting software for the asset management industry, a sector in which StatPro also operates.

StatPro will report its full-year results for the year ended 31 December 2016 on 15 March 2017.

Reaping rewards of early investment in the cloud

The most recent trading update from StatPro, which came at the end of last month, showed that the company has been vindicated by its early investment in cloud technology.

Nowhere is this point more evident than in the sales of StatPro Revolution, its cloud-based portfolio analysis product, which generated recurring revenues of £15mln last year, up 68%.

From a standing start, Revolution now makes up just under 40% of the group's total turnover, which rose 18% in the 12 months to 31 December 2016.

Also of note in that update was the resilience of StatPro Seven, where the underlying cancellation rate was just 2%. The order book currently stands at £46mln, a year-on-year increase of 9%.

“This success is undoubtedly due to our early investment in cloud technology, over eight years ago. The complexity and scale of the technology we have developed will be difficult to imitate,” said chief executive Justin Wheatley.

“We are now firmly established as a leading innovator in the rapidly digitising asset management industry.”   

The supplier of analysis and pricing software to the asset management industry also added that revenues and profitability should be in line with expectations when it reports its 2016 full-year results on March 15.

WATCH: StatPro’s cloud solutions platform gives it a ‘huge advantage’ against rivals, says CEO

Brokers upbeat

As a result of that bullish update, broker N+1 Singer upgraded its price target for StatPro.

The broker sees StatPro as a ‘buy’ and set a new price target of 163p, up from 158p, which represents some 79% upside to the current price of 91p.

“We increase our 2017 revenue estimate by 2% to reflect the beneficial impact of weaker sterling but make no changes to our earnings numbers to allow headroom for increased investment,” said N+1.

“We continue to look for further significant Revolution orders as evidence that this year will provide a springboard for accelerating growth.”

Likewise, Panmure Gordon analyst Snajay Jha is a fan of the stock too, and he has StatPro as a ‘buy’ with a price target of 159p.

Speaking on the increased investment in Infovest, Jha reckons it’s a wise move for the company.

“This is a timely and attractively priced acquisition. Infovest has been performing strongly since StatPro made its initial investment for 51% stake [last year].”

Information security “paramount”

StatPro had its information security accreditation rubberstamped in the USA towards the end of last year.

It was re-certified for the SSAE16 Type II (SOC1) controls standard along with the International ISAE3402 certification.

Both standards cover StatPro’s data operations, hosted services and the StatPro Revolution platform in North America.

Wheatley said maintaining high levels of information security is “paramount” to the business.

“Staying ahead with technological changes, opportunities and threats is key to delivering a high value service for our clients, that not only delivers powerful features, but also delivers on confidentiality, integrity and availability,” the boss added.

Shortly after the accreditation, StatPro’s revolution received further recognition from across the pond when Northern Trust announced it had enhanced its regulatory risk reporting capabilities using the software.

Share price

The share price went on a tear in the middle of 2016, adding more than 50% between March and October.

It fell back towards the end of the year but has stabilised in recent weeks around 91p which is where it finds itself currently.

That gives the company a market capitalisation of approximately £59mln.

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