NEC acquires Avaloq from Warburg Pincus to begin next phase of growth and accelerated innovation Oct 4, 2020
- NEC Corporation, a leading Japanese-based IT group, announces agreement to purchase 100% of Avaloq shares from existing shareholders, including Warburg Pincus LLC
- Acquisition values Avaloq at CHF 2.05 billion
- Long-term strategy and shared values ensure continuity andstability for the whole Avaloq community, including Avaloq’s clientsand its employees
- Partnership enables Avaloq to accelerate innovation and enlargefootprint around the globe
Tokyo/Zurich/London – 5 October 2020 – Avaloq, a Swiss-based global leader in digital banking solutions, core banking software and wealth management technology, today announced its acquisition by Japanese NEC Corporation. Each being a market leader in their own field, the combination of their shared vision, technological strengths, and global presence, will accelerate Avaloq’s long-term growth, global expansion and value creation strategy.
Founded in 1985, Avaloq provides powerful cloud solutions for banks and wealth managers around the globe through business process as a service (BPaaS) and software as a service (SaaS). With more than 120 years of expertise, NEC is a leader in the integration of IT and network technologies that benefit businesses and people around the world. Listed on the Tokyo stock exchange, NEC is a truly global organization with office locations in more than 50 countries. NEC today announced the acquisition of 100% of Avaloq’s shares, 45% of which are owned by Warburg Pincus, while the rest are held by Avaloq’s founder and employees. The acquisition is expected to be worth CHF 2.05 billion, and expects to complete by April 2021, following the confirmation of necessary procedures and approvals for each organization.
Avaloq will continue to operate as its own entity, headquartered in Switzerland. Clients will continue to enjoy the high level of service they’ve grown used to. This transaction will not lead to a reduction in workforce, and the management remains fully committed to Avaloq’s growth story.
Best of both worlds for Avaloq and NEC
NEC is committed to realizing a society that embodies the values of safety, security, fairness and efficiency through digital inclusion. The company is focusing its efforts on solutions that leverage information and communication technologies (ICT) to create advanced social infrastructure. These solutions are known as NEC’s Solutions for Society.
Robust financial institutions build a crucial part in NEC’s vision for smart cities. Banks and financial institutions worldwide are embracing rapid digitization as a way of offering secure and seamless financial services and addressing a rapidly growing customer appetite and global market for digital- first banking. With its 30-year heritage and focus on innovation in digital banking solutions, core banking software and wealth management technology, Avaloq is uniquely qualified to complement NEC.
Avaloq and NEC will be placing great emphasis on building a long-term and strong relationship. Through the acquisition of Avaloq, NEC acquires domain knowledge in the digital finance field and enters this segment globally.
Research and technology
NEC has very well-established research centres, amongst others also in Heidelberg, Germany, which Avaloq would start to collaborate with in order to anticipate future trends as early as possible and build smarter solutions for clients. Digitization and big data are rapidly transforming the world, making it possible to offer each individual services and solutions tailored to their specific needs. Key to the seamless integration of this technology in society — so that people can enjoy its benefits without worrying about security or access — is the use of biometrics, an authentication technology that identifies individuals based on physical and behavioural characteristics peculiar to that individual. NEC is a clear leader in this and other fields such as artificial technology with “NEC the WISE”, and its innovative blockchain technologies. NEC holds great ambitions for Avaloq in this space, which will greatly benefit from NEC’s very strong research-oriented approach and the vast resources it pours into research & development.
Democratization of wealth management fosters digital inclusion
Avaloq is a leader in digital banking solutions for high end wealth management services and private banks globally. While this area remains a clear focus for Avaloq, going forward we strive to include also the affluent segment. Digital inclusion is going to be one of the most important topics in the future. Customized wealth management advice remains almost exclusive to high net worth individuals to date. Through digitization, we will be able to democratize wealth management and make asset classes and advice-led banking services, which are largely reserved for the wealthy only, available to mass affluent investors as well. This opens up a highly attractive segment of new clients for private banks and wealth managers globally.
Jürg Hunziker, CEO of Avaloq, said: “The Avaloq team is delighted to be joining NEC Group, a highly trusted and well-respected company with a long heritage, which will help further enlarge our geographical footprint across the globe. Due to very similar values of professionalism, reliability, quality and excellent service for clients with a focus on precision, we firmly believe that this partnership will be a successful one for employees, clients as well as other stakeholders. The whole Group Executive Board at Avaloq is committed to driving forward our growth strategy and we are very glad to have a strong partner on our side who supports our long-term vision. With NEC, Avaloq found a perfect new home to continue our success story of serving our clients with solutions that make their lives simpler in an ever more complex world. The Avaloq team would like to thank Warburg Pincus for its valuable strategic advice and continued support during our successful partnership.”
Francisco Fernandez, founder and chairman of Avaloq: “With this step I leave Avaloq in the best hands possible. My goal was to find a partner and owner, who can make Avaloq grow and prosper further, for many years to come. Talking to NEC’s top managers it became clear to me, that they share my ambition for Avaloq to continue to shape the future of the financial industry by continuing to invest heavily in R&D. But I also sensed the cultural fit, caring about customers and people, striving for excellence and highest quality standards, for which ultimately Switzerland and Japan stand for. I am proud to add a humble contribution to the legacy of a great visionary engineer: Kunihiko Iwadare, whos spirit is still perceptible at NEC today. I remain available, deeply grateful and in sincere friendship to everybody that accompanied me during this 30-years journey.”
Takashi Niino, President and CEO of NEC Corporation, said: “NEC strongly believes in the importance of safety and security around financial institutions, which is absolutely crucial for sustainable prosperity and digital inclusion. Avaloq is a recognized global leader in their field, and their compelling offering is expected to complement our current solutions. NEC aims to further expand its business in the digital government and digital finance areas, by globally developing SaaS and BPaaS business models that utilize software and technologies from throughout the NEC Group, including Avaloq’s.”
Adarsh Sarma, Partner and Co-Head of Warburg Pincus Europe said: “We have enjoyed a rewarding and successful partnership with Avaloq’s Chairman and founder, Francisco Fernandez and Juerg Hunziker, Group CEO. Avaloq has grown quickly to establish itself as a global leader in banking software and is one of the most strategic fintech companies in its space. Together with management, we have transitioned Avaloq from an on-premise business model into software-as-a-service provider, launched new innovative cloud native digital products and expanded into multiple new geographies. With strong leadership and governance in place, we are confident that Avaloq will have great future success under new ownership and wish them the very best.”
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Founded in 1985, Swiss-based Avaloq is a global leader in digital banking solutions, core banking software and wealth management technology. We provide powerful cloud computing solutions for banks and wealth managers through business process as a service (BPaaS) and software as a service (SaaS). Avaloq is the only independent banking software provider to develop and also operate its own software.
Our established core banking system is complemented by three innovative platforms – Engage, Wealth and Insight – providing end-to-end digital solutions at a level of simplicity that will pave the way for the democratization of wealth management. To further spur innovation, we connect our clients with selected fintechs through the Avaloq.one Ecosystem, our open banking marketplace.
More than 150 banks and wealth managers with around CHF 4.5 trillion in assets managed worldwide trust Avaloq for its award-winning products and services. Avaloq has its headquarters in Zurich and employs more than 2,000 people around the world.
For more information, visit Avaloq at www.avaloq.com.
NEC Corporation has established itself as a leader in the integration of IT and network technologies while promoting the brand statement of “Orchestrating a brighter world.” NEC enables businesses and communities to adapt to rapid changes taking place in both society and the market as it provides for the social values of safety, security, fairness and efficiency to promote a more sustainable world where everyone has the chance to reach their full potential.
For more information, visit NEC at www.nec.com.
About Warburg Pincus LLC
Warburg Pincus LLC is a leading global private equity firm focused on growth investing. The firm has more than $53 billion in private equity assets under management. The firm’s active portfolio of more than 185 companies is highly diversified by stage, sector, and geography. Warburg Pincus is an experienced partner to management teams seeking to build durable companies with sustainable value. Founded in 1966, Warburg Pincus has raised 19 private equity funds, which have invested more than $84 billion in over 900 companies in more than 40 countries. The firm is headquartered in New York with offices in Amsterdam, Beijing, Berlin, Hong Kong, Houston, London, Luxembourg, Mumbai, Mauritius, San Francisco, São Paulo, Shanghai, and Singapore.
For more information please visit www.warburgpincus.com.