Lombard Risk Management plc (LSE: LRM) (“Lombard Risk”), a leading provider of integrated collateral management and liquidity, regulatory and MIS reporting solutions for the financial services industry, announces that it has acquired the regulatory reporting business of SOFGEN for a total consideration of US$ 4,250,000 payable in a combination of cash, loan notes and equity.
The acquired business is profitable, and in addition the Board expects appreciable revenue synergies over and above the sum of the two businesses at present. The equity component of the transaction will be satisfied by SOFGEN subscribing for 2,327,556 new shares in Lombard Risk at 11.75p, the price prevailing on the date on which a letter of intent was signed. Application has been made for the admission of these new shares to AIM. Following the transaction the number of Lombard Risk shares in issue will increase from 206,926,786 to 209,254,342.
The main part of the business acquired, which in the past was known in the U.S. regulatory market as IDOM USA, is the United States and Canada regulatory reporting product REG-Reporter® which has a very strong client base in North America including top banks such as Bank of America and Royal Bank of Canada.
The transaction will make Lombard Risk:
• The top provider of regulatory reporting products to foreign banks in the United States
• The third largest provider (as measured by assets reported on, not number of institutions) of regulatory reporting to domestic banks in the United States after FIS and Jack Henry
• and with a bigger presence than all of Lombard Risk’s international competitors combined.
Lombard Risk already has a major business in regulatory reporting through its existing REPORTER product which is used globally including in the United States. The combined business now has over 250 clients for bank regulatory reporting around the world. Lombard Risk has the largest market share of any regulatory reporting product used by banks in the United Kingdom – with around 130 UK clients.
As well as the UK and the Americas, Lombard Risk also has extensive coverage of Asia Pacific markets with regulatory reporting solutions in use in Singapore, Hong Kong, Japan, Indonesia, Thailand and other Asian countries. Lombard Risk recently announced a contract win for Chinese regulatory reporting, and has Indian and Korean regulatory reporting under development.
Lombard Risk also has products live for liquidity reporting and regulatory stress testing, and is becoming the vendor of choice among top banks for its COLLINE® collateral management and clearing product. Regulatory initiatives such as Dodd-Frank have already won business for the company.
Commenting on the acquisition, John Wisbey ceo of Lombard Risk said: “This is an important strategic breakthrough for us, as it gives critical mass in the North American market place, both for foreign and domestic banks in the United States. We already had this for collateral management but we now have it for regulatory reporting. The REG-Reporter business and its management are well respected in the market, and it has built an impressive and very loyal client base. As the market moves away from having multiple suppliers in different countries, this acquisition will allow us to serve our global clients better with much more ability to conclude deals in multiple countries and continents. We understand this business and its business model extremely well, so we are absolutely ‘sticking to the knitting’ with this acquisition.”
Vincent Raniere, who, following the acquisition, will be managing director and head of Regulatory – Americas for Lombard Risk, commented: “My team and I are very pleased for REG-Reporter to have the backing of a global software company which understands regulatory reporting so well. Our technology team will have access to a much deeper technology organisation which is already very experienced in regulatory requirements, web technology, XBRL, workflow and the requirements for fast and scalable performance, while at the same time we will have the ability to extend our international reach greatly and to offer more international regulatory services to our U.S. clients”.
